Goldman Manifesto Echoes Past Questions About Bank
The young banker whose dramatic public resignation stung Goldman Sachs this week joins officials from every corner of the government in questioning whether the august investment house deals honestly with all its clients.
In separate cases, judges, lawmakers and regulators have suggested the bank ignores conflicts of interest and sells to its clients investments it knows are weak, all in the pursuit of profit.
The resignation Wednesday by Greg Smith, a 33-year-old banker for Goldman in London, was a shot from within Goldman's ranks. In an Op-Ed article for The New York Times, Smith said the bank sells financial products "that we are trying to get rid of.""It makes me ill how callously people talk about ripping their clients off," Smith wrote. The essay was widely circulated online, and Smith became a trending topic on Twitter. But his charges were only the latest embarrassment for Goldman, which has built a sterling reputation over 143 years on Wall Street. The bank paid $550 million in 2010 to settle civil charges that it misled investors while selling them investments in the U.S. housing market as the bubble burst â¿¿ even as Goldman reaped hundreds of millions from its own bets against housing. A congressional committee recommended that law enforcement authorities look into a series of deals that Goldman sold while executives derided them in emails as "junk," ''crap" and another profane adjective. And last month, a Delaware court nearly blocked a merger between Kinder Morgan and El Paso, two energy companies, because Goldman had ties to both companies, raising questions about a conflict of interest. "This is the latest entry into a long-running narrative that they don't put their clients first," said Michael Robinson, a former official with the Securities and Exchange Commission. "If your business is built on trust, that's not going to fly."
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