In a stunning indictment of the executive culture that is the nexus between Washington D.C. and Wall Street, former executive director of the investment firm Goldman Sachs, Greg Smith, resigned from the firm with an op-ed in the New York Times on Wednesday which can be best described as scathing.
In “Why I Am Leaving Goldman Sachs,” Smith described the firm as “toxic” and “destructive.”
"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," Smith writes.
“Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence,” writes Smith. “When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm's culture on their watch. I truly believe that this decline in the firm's moral fiber represents the single most serious threat to its long-run survival.”
On its face, Smith’s indictment of his former colleagues and the firm he worked at for 10 years based in its London office would appear to indict Wall Street and only Wall Street. Democrats in Washington D.C. have spent the better part of a year attempting to tar Republicans with being linked inexorably to the culture of mismanagement which has become synonymous with finance.
Until recently, the Democratic party was doing its best to cozy up to the anti-capitalist protesters that compose the Occupy Wall Street movement (before it became abundantly clear that this violent, leaderless and incoherent movement was composed primarily of agitators that would tarnish the image of the Democratic party if they got too close). But these revelations about Goldman Sachs should terrify the Obama White House – it is they that have the closest ties to the firm and its culture of corruption.
It was former Goldman Sachs head Jon Corzine, also the former governor of New Jersey and a former U.S. Senator from the Garden State, who was floated as a possible replacement to Treasury Sec. Tim Geithner. That is, before he was implicated in the loss of billions following the collapse of the firm MF Global, which he led. Geithner, too, was a Goldman Sachs alum before he took a position with the Fed.
President Obama himself has benefited from Goldman’s largess. In 2008, Goldman was Obama’s second largest campaign contributor. “Goldman Sachs' political action committee and individual contributors who listed the company as their employer donated $994,795 during 2007 and 2008 to Obama's presidential campaign, the second-highest contribution from a company PAC and company employees,” reads a CNN report from 2010. “Goldman Sachs contributions to the Obama campaign were more than four times larger than the $230,095 in donations to Sen. John McCain's presidential campaign.”
Obama’s administration is actually composed of many Goldman’s alumnus – to the chagrin of both the right and the left.
Now household names that had held top positions at Goldman Sachs and are now or were leading figures in the Obama White House include:
- Gary Gensler, U.S. Commodity Futures Trading Commission head
- Rahm Emanuel, Former White House Chief of Staff
- Mark Patterson, Deputy Treasury Secretary
- Larry Summers, former economic advisor
- Stephen Friedman, Chairman of Obama’s Foreign Intelligence Advisory Board
- Karen Kornbluh, U.S. Ambassador to the OECD
The list goes on and on.
The White House will be in full damage control over these revelations by Smith and they, as well as the Democratic party, will do their best to distance themselves from Goldman Sachs and/or attempt to link the Republican party to the suspect institution.
If you were less informed, you may have believed them. Fortunately, you’re far too well informed to fall for it.
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Follow Noah Rothman @Noah_C_Rothman
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