Ex-Goldman Sachs banker lashes out at its practices

A Goldman Sachs banker has launched a withering attack on the bank in a newspaper column announcing his resignation, saying that some managing directors at the Wall Street firm had referred to their own clients as “muppets”.

In an opinion column for yesterday’s New York Times, Greg Smith, who worked in equity derivatives, said Goldman had become “as toxic and destructive as I have ever seen it”.

“It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ’muppets’,” he said.

The National Treasury Management Agency is one of Goldman Sachs clients. The NTMA appointed Goldman Sachs International as advisors as part of its banking unit’s involvement in overseeing the capital-raising exercise for AIB, Bank of Ireland, EBS and Irish Life & Permanent

Another Irish client is IBRC, formerly Anglo Irish Bank, which has retained Goldman Sachs International, since Jul 2006 as the sole prime broker providing a range of financial services.

Goldman Sachs International’s chairman is Irishman Peter Sutherland.

Goldman Sachs issued a response to Mr Smith’s criticism.

“We disagree with the views expressed, which we don’t think reflect the way we run our business. In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves.”

Calls to Mr Smith, who was a vice-president in derivatives sales at the firm, were referred to the bank’s press office. According to the British Financial Services Authority’s register, he joined Goldman Sachs’s British unit a year ago.

Smith’s letter set off a blizzard of comments on Twitter and other social media.

While many commentators expressed surprise about the allegations, others called for Mr Smith to shed light on why he left the bank, or pointed out he had been employed in a comparatively junior role.

Some poked fun at Smith’s bronze medal for table tennis at the Maccabiah Games in Israel.

“Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore,” Mr Smith said in the article.

Mr Smith’s column said that the London-based banker had spent 12 years at the bank.

Goldman Sachs, fourth among investment banks last year according to fee-income rankings compiled by Thomson Reuters and Freeman Consulting, was once described as “a great vampire squid” in Rolling Stone magazine. The reference was to its influence in politics and business.

It faced a series of high-profile incidents potentially damaging to its image after the near-collapse of the global banking system since the middle of 2007.

One of its bankers, Fabrice Tourre — who referred to himself as “fabulous Fab” in emails — is still embroiled in legal claims in the US after allegations that he duped buyers of a complex credit instrument.

And, two years ago, chief executive Lloyd Blankfein caused a media storm when he said that, as a banker, he was just “doing God’s work”, defending high banker pay and the role their institutions play in the economy.

Earlier this month, Goldman Sachs’s public relations chief Lucas van Praag left after many years in the job, and was replaced by Richard “Jake” Siewert, a veteran of the Clinton and Obama administrations.

Van Praag was known for defending Goldman executives’ actions and their multimillion-dollar pay packages, often telling reporters that their stories were half-baked or unintelligent.

Siewert’s appointment came as the broader financial industry faces protests from groups like Occupy Wall Street and is under continuous pressure from regulators after the financial crisis.

— Reuters