A former Goldman Sachs executive’s vitriolic attack against the firm’s "toxic and destructive" culture is just another blow to the investment bank’s reputation, according to “Cityboy” whistle-blower Geraint Anderson.
“I am sorry to say this is another nail in the coffin for that reputation Goldman Sachs has earned,” said Anderson, a former utilities analyst and author of London banking exposé, "Cityboy: Beer and Loathing in the Square Mile."
He called it a shock “that one of their own has come out to discuss this openly,” he said.
In an opinion piece titled "Why I Am Leaving Goldman Sachs" that was published Wednesday in the New York Times, former executive director Greg Smithwrote that "the interests of the client continue to be sidelined in the way the firm operates and thinks about making money."
Goldman CEO Lloyd Blankfein defended his firm in a subsequent op-ed in the Wall Street Journal, saying Smith’s assertions “do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.”
Anderson, whose second book, “Just Business,” is also about the banking industry, said the practice of putting an investment bank's profits ahead of its clients' returns is widespread in the industry. He pointed as an example to a 2010 federal case in the U.S. that accused Goldman Sachs of misleading investors about a subprime mortgage product as the housing market began to collapse. Goldman never admitted or denied the allegations but agreed to pay a $550 million fine in order to settle the charges, which came from the U.S. Securities and Exchange Commission.
"It’s amazing that after all the banks have gone through over the last few years, they haven’t cleaned up their acts," Anderson added.
He claims clients’ needs are no longer the top concern for many investment banks.
"Over my 12-year career, I saw a momentum change from thinking about your client to making as fast a buck as quickly as possible," he said. "It was partly because we felt the party was going to come to an end at any point."
Anderson thinks this latest blow to Goldman’s reputation could damage the investment bank’s long-term prospects. "But never underestimate Goldman Sachs," he added. "This is a company that will survive and adapt."