A Banker that 'Gets It'

Wordsmith

LE
Book Reviewer
#1
Interesting comment piece in the New York Times today. (My bold).

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=1&_r=3&hp

It's by Greg Smith, an executive director at Goldman Sachs who's resigning today.

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
A good article that says a lot about banking culture.

Wordsmith
 
#2
Banking was meant to be boring and respectable. The bowler hat was short hand for straight laced respectability that could be trusted impicilty ok they didnt get vast riches but they didnt cause disasters.
creative banking like creative accountancy is very bad news as we have found out :(
 
#3
Sadly this is neither news nor unique to GS, at least to the people familiar with this industry. It happened to me when I was at a different US firm (at that time the benchmark in their field) and the new CEO took over after a merger. Within 18 months the focus changed from advising the client on what is best for them, to pushing people to 'sell' and pipeline management (a tool with which the senior guys would monitor deal creation and progress). It now mattered more what was best for firm, the best 'pushers' got the biggest bonuses. Surprisingly, this has not backfired to the extent I thought it would, even 10+ years on. Some firms live of a previously earned and nurtured reputation for long enough to survive for decades to come.

Two things happened at my previous firm as a consequence of this new strategy: A lot of the A rated people got out and joined other firms. Mediocre people started recruiting other mediocre people who couldn't or wouldn't question the directives pushed down, quality suffered, execution deteriorated, yet clients were asked to pay more for less. I was avoiding client meetings at this point and got out shortly after.

Secondly innovation became nonexistent and the firm changed from a prospector to 'just another bank' with a unique reach. Clients bitched and moaned, but the cost was driven down and profitability increased. A lot of our biggest clients had no choice but to do business with the firm because of its reach and global capabilities. The bottom line is that the share price of this firm is 90% down from where it was when I was there, in the end they always get punished one way or the other. GS are no longer the self-proclaimed masters of the universe.
 
#5
Certainly a thought-provoking piece. However, it simply confirms what many people in this country have been saying for some time now: that despite the fact that bankers played a major part in triggering the current financial crisis, the b*ggers have learnt absolutely nothing.
 
#6
Posh bank Goldman Sachs are a right bunch of cnuts and lack customer focus!!!! Thank god for that, I thought it was just Nat West, I won't have to move my account.
 
#7
Very accurate article, like Viceroy I too witnessed the decline in moral standards in the industry, I reckon it started about 2002/03.

What struck me were the interns - greedy, one dimensional, poorly finished who would think nothing of asking how much money they could expect to earn in bonuses. Most of them were barely articulate, socially dysfunctional mongs, their greed and self promotion was palpable. There are certain sections of the community that have encouraged this ..... I recall one day "discovering" thankyou card to "Uncle xxx", seems that this bloke had been interviewing a promoting members of his extended family and indeed his community at the exclusion of all others. If a bloke with a tie from Eton or Charterhouse had been caught doing it, an investigation would have happened.

I thought the recession might clean this virus out of the industry, but appears to be resiliant. These folks have an amazing survival instinct ( a complete lack of morals helps), I know a number of my former colleagues that are good at their job, but they just aren't bastards, they got fizzed and the slimebags and cockroaches remained.

The Law is going the same way, especialy the big firms.

I really hope that some of the more senior people start to understand that inter office politics, backstabbing and self obsession are actually bad for business - but I'm not optimistic.

Some of the blame lies with the appraisal system, where you have to force rank people into a bell curve or in the Army's case top, middle and bottom third. It is of course a beauty contest in the main and totally subjective, but it does tend to sacrifice the teams main effort, in favour of the neccessity of "winning" against one's work colleague. It is far more important these days to make yourself look good and your co-workers look bad, than it is to actually get the job done.

Really successful people have worked out that the workplace now is merely a platform for self promotion, every day you should ask yourself "what have I done today to improve my personal stock price".

But when you look at politicians, is there any wonder - look at the hypocrites; Livingston, Blair, Milliband, Brown, Cable all coining it through private or offshore tax constructions, whilst at the same time claiming to be "progressive", whilst simultaneously raping the middle class for every penny they have.
 
#8
Bit of hypocrite really though. He's the ****ing CEO if he can't make the changes well everyone's****ed.
 
#9
Its bollocks because they have NEVER had the best interest of the customers or client at heart, not now, certainly not 12 years ago or even since their conception.Bankers all get it, they hand out loans to poor people, if they really cared, they would council them and then deny them loans.They charge you for overdrawing, the people that overdraw usually do so because they are poor, so to charge them more is a moral disgrace, perhaps they should prevent overdrawing instead of making money off the poorest customers.Bollocks to this and them, the banks are a massive problem to all of us, same as governments, we choose them, but they all want to rape us.
 
#10
LMAO why is there an advert for Professional Trader - No experience needed at the bottom of this thread.

How can you be a pro without experience?
 
#11
Its bollocks because they have NEVER had the best interest of the customers or client at heart, not now, certainly not 12 years ago or even since their conception.Bankers all get it, they hand out loans to poor people, if they really cared, they would council them and then deny them loans.They charge you for overdrawing, the people that overdraw usually do so because they are poor, so to charge them more is a moral disgrace, perhaps they should prevent overdrawing instead of making money off the poorest customers.Bollocks to this and them, the banks are a massive problem to all of us, same as governments, we choose them, but they all want to rape us.
Here we go again ....... another Mirror reader foaming at the mouth.

Fella, there is a thing called google. Here, let me help; Community Reinvestment Act - Wikipedia, the free encyclopedia

Try looking at what Clintons "reforms" did to the US banking sector and just why, RETAIL bankers were forced to loan to Billy-Bob Webbin-Fingers to buy his flea ridden pit in Utah and Alyyssa the Detriot waitress was able to get a huge loan based on her self assessment of tips for a 3 bed home.

Editied to add - you might also google the repeal of the Glass - Stegall Act and tell what impact you think that might have had on the crisis of 2008, perhaps use the Lehmans CDS book by way of example and I would start with a critque of the interbank re-structures after Glass-Stegall with particular reference to RMBS products....... I look forward to your analysis.
 
#12
Bit of hypocrite really though. He's the ****ing CEO if he can't make the changes well everyone's****ed.
Actually he's probably more like a Lt Col; view this much the same as Stuart Tootal's resignation. Decent bloke in middle management gets fed up, gives up his career and throws some sh*te on a fan pointed at his bosses.
 
#13
Bit of hypocrite really though. He's the ****ing CEO if he can't make the changes well everyone's****ed.
As a CEO in an American organisation is somewhere between the tea boy & a post room sorter probably not a lot. I knew "Senior Vice Presidents" in their second year out of University...

LMAO why is there an advert for Professional Trader - No experience needed at the bottom of this thread.

How can you be a pro without experience?
Well after all the stock market deregulation of the '80s that let hoi polloi into the market talented barrow boys were exactly what the City was after & their experience was running a market stall, adding up darts scores & working out odds in the bookies. Could be why we got to where we are today...
 
#14
Its bollocks because they have NEVER had the best interest of the customers or client at heart, not now, certainly not 12 years ago or even since their conception.Bankers all get it, they hand out loans to poor people, if they really cared, they would council them and then deny them loans.They charge you for overdrawing, the people that overdraw usually do so because they are poor, so to charge them more is a moral disgrace, perhaps they should prevent overdrawing instead of making money off the poorest customers.Bollocks to this and them, the banks are a massive problem to all of us, same as governments, we choose them, but they all want to rape us.
I am with Hootch on this (surprise, surprise). Also, you have to appreciate that there is a difference between 'high street' or retail banking you may have experienced and corporate- and investment banking; dealing with clients that each mean tens of millions to the employer's bottom line every year. I was working with Fortune 500 firms and I assure you we did have the clients best interests at heart but were able to charge a fair price for our products / efforts, not too much, not too little.
It turned out it was too little for the new management past late 90s (that merger /new CEO was a direct consequence of Clinton's 'reforms' of the aforementioned glass / steagall act) and the gap between pricing and service widened. The reason for this was often simple: You had people with a transaction- or investment banking or brokerage background in charge of banks whose business it was to help their clients build their business over decades. The whole mid- to longterm view went out the window in favour of short term gains and smaller deals. Bank bashing isn't all THAT simple you know!

These CEOs in turn blamed it on shareholders (bollocks IMHO), which really ended up footing the bill. Rather than having a steady stream of dividends and an ROE of 10-12%, it had to be double that and in the end the share price collapsed and everyone needed a bailout.
 

Wordsmith

LE
Book Reviewer
#15
There will always be risk takers in any organisation taking desperate risks to push up their bonuses/pay or pump up their ego. Enron is an example that comes to mind. But the checks and balances that stop the failure being systemic in other market sectors seem to be lacking in the banking sector. Enron was a big failure, but it didn't bring the energy sector crashing to its knees. The banking sector needs to have the checks and balances restored - then the risk of systemic failure failure is reduced.

There was a very good point made in the Financial Apocalypse thread. A lot of these more complex financial instruments (CDO's, CDS's, SUV's, etc) were dreamed up to get around the limitations imposed by Fractional Reserve Banking - enabling banks to vastly leverage their balance sheets. This means when a financial crisis comes the banks do not have the reserves/tier 1 capital to cover the inevitable losses.

I think regulation should specify what a bank is allowed to do. If you come up with a new class of financial product - you should have to get express approval from the regulator to use it. Bankers seem to have been operating in a damaging, out of control manner - but not let us forget that their partners in crime were the governments and regulatory agencies who failed to control (and punish) unacceptable behaviour.

Wordsmith
 

TheIronDuke

ADC
Book Reviewer
#16
Enron was a big failure, but it didn't bring the energy sector crashing to its knees.
It did for Arthur Andersen and caused much midnight oil to be burned at the rest of the Big Five. One of them was bricking it for about two years because they saw the chasm opening in front on them. Today? Business as usual. Heres a list of PWC (picked at random) transgressions...

PricewaterhouseCoopers - Wikipedia, the free encyclopedia

Sadly the greed and 'shaft the client' attitude noted above in banks is also rife in many other sectors - law, accountancy, advertising to name but three. Seems there are many people who regard Gordon Gecko as a role model rather than an actor playing a part in a film.
 
#17
Sadly the greed and 'shaft the client' attitude noted above in banks is also rife in many other sectors - law, accountancy, advertising to name but three. Seems there are many people who regard Gordon Gecko as a role model rather than an actor playing a part in a film.
Too right. When I joined a Big 6 Firm we would do whatever the client wanted as long as it was within the bounds of taste & legality. Crucially what we did was provide a top-quality service as specified by the client.

By the time I left it was not sufficient that an Audit Manager (let's say) ran a successfuly Audit that came in on budget & satisfied client, shareholders & regulators alike. We were also assessed on what else we had sold to the clients in terms of consulatancy services, tax services & all sorts.

I will gloss over my memories of working for RBS. Going there was one of the worst experiences of my life & I still bear the scars...
 
#19
All bankers are sinners damned to the lowest pit of hell for thier sins.

Two popes have said so:
Pope Clement V made the belief in the right to usury a heresy in 1311, and abolished all secular legislation which allowed it.[SUP][12][/SUP] Pope Sixtus V condemned the practice of charging interest as "detestable to God and man, damned by the sacred canons and contrary to Christian charity."[SUP][12][/SUP]detestable to God and man, damned by the sacred canons and contrary to Christian charity.
Plus the great thinkers of the ages realise they are a bunch of cnuts as well

Plato, Aristotle, Cato, Cicero, Seneca,[SUP][18][/SUP] Aquinas,[SUP][19][/SUP] Muhammad,[SUP][20][/SUP] Moses,[SUP][21][/SUP] Philo and Gautama Buddha have all denounced them.
So they are heretics and detestable and should be shunned by all right thinking folk.
 

Wordsmith

LE
Book Reviewer
#20
Nice parody in the Daily Mash.

The Daily Mash - Why I am leaving the Empire, by Darth Vader

TODAY is my last day at the Empire.

After almost 12 years, first as a summer intern, then in the Death Star and now in London, I believe I have worked here long enough to understand the trajectory of its culture, its people and its massive, genocidal space machines. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, throttling people with your mind continues to be sidelined in the way the firm operates and thinks about making people dead.

The Empire is one of the galaxy's largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.
Enjoy....

Wordsmith
 

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