It’s not been the best of weeks for Goldman Sachs. The share price lost recent gains, but remains stable around $1.20, the market capitalisation remains above $60billion, they’re still the world’s most powerful investment bank. But the brand is suffering. With the help of the New York Times, outgoing executive, Greg Smith, broadcast his resignation letter to the world, criticising a “toxic culture” in which Goldman treats its customers with contempt, and prioritises an unsustainable pursuit of profits. From Tories to mortgage-backed bonds, the word “toxic” has obviously become the chosen metaphor for anything ominous.
Most people might be unsurprised to hear the morality of an investment bank called into question, and that’s perhaps part of what makes the fuss surrounding Smith’s letter curious. His is not so much a Damascene conversion as a nostalgia that Goldman once was, and could be, so much more. The resignation letter talks of Smith's “privilege of advising two of the largest hedge funds on the planet” (still leaving the door open for the existence of hedge funds on other planets), the pride with which he featured in Goldman’s recruitment campaigns at university campuses. It is hardly a tirade against financialisation, or against the undemocratic chaos that markets foist upon society. His is more a plea that it should be done calmly and responsibly, so that investment banks can keep doing it, and have fewer recruitment difficulties. We must assume rival executives across the industry will be happy with the reputational damage done at Goldman. It’s hard to imagine Smith having problems finding new employment, and to be cynical, one could suggest that his personal brand will prosper as the world’s foremost moral banker.
None of this is particularly troubling, finance is hardly renowned as a world of high morality and deep soul-searching. What is more distressing is the kudos Smith seems to have been granted for his honesty, from The Guardian to Rolling Stone, with not a scrap of praise withheld for his leaving the fundamental principles of the industry entirely untouched. For Goldman it’s a PR dilemma, for investment banking it’s a great victory.