Now, there is a heavy discussion in Wall Street about financial holding company Goldman Sachs, after Greg Smith’s, a London-based executive director of equity derivatives at Goldman, wrote a scathing Op-Ed column in The New York Times called “Why I Am Leaving Goldman Sachs.” (http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?pagewanted=2&_r=1) The reason he stated for his resignation is that Goldman Sachs culture is changing.
They are not Customer centric; rather they focus on companies’ profit. He also stated that he was able to hear his manager calling their customers as “Muppets”. He feels that he doesn’t want to continue with this organisation and he is pretty much clear that people who are focusing on profits will not help to sustain the firm. So, he advised the top management to get the culture right again.
What has happened to Goldman Sachs? Is Greg Smith right about Sachs group? I think he is right. Around 2002, Goldman Sachs’ role in Greece Scandal itself had exposed their importance on customers. Greece wanted to enter the European Union. For that, their deficit should be 3% of their GDP. They were not able to do so. Only Sachs group has helped Greece to cook the books by devising a special kind of swap with fictional exchange rates. Now, this problem was magnified in the form of European Sovereign debt crisis.
In 2007, when the housing bust began to take its toll on Wall Street, Goldman Sachs was the first to ask for bailout from the Federal Reserve and approached them to change their status to bank holding companies. Is it the right strategy of Sachs to portray them as a Commercial banker after diluting the savings of huge customers around the world?
During this time, American International Group, an insurance giant facing collapse due to its exposure to the mortgage crisis, was Goldman’s largest trading partner. A.I.G. received an emergency $85 billion bailout from the federal government. Apart from this, SEC has filed a suit against Goldman Sachs stating that they had wrongly structured a security called Abacus 2007-AC1 and generated billions of losses for Abacus investors. Under the settlement, Goldman paid back the profit made from the Abacus deal and also paid a civil penalty.
All these incidents clearly state the importance Goldman Sachs gives to profits and depict the culture of the organisation. I feel Greg Smith is clear about the future of Goldman Sachs in his Op-Ed column.
However, let us also listen to Lloyd Blankfein, “In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion. But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.” (http://www.valuewalk.com/2012/03/lloyd-blankfein-goldman-sachs-oped/)
I think, as an MBA student, it is for us to take a call on how we want our employer to behave! Let me know your thoughts on this.
They are not Customer centric; rather they focus on companies’ profit. He also stated that he was able to hear his manager calling their customers as “Muppets”. He feels that he doesn’t want to continue with this organisation and he is pretty much clear that people who are focusing on profits will not help to sustain the firm. So, he advised the top management to get the culture right again.
What has happened to Goldman Sachs? Is Greg Smith right about Sachs group? I think he is right. Around 2002, Goldman Sachs’ role in Greece Scandal itself had exposed their importance on customers. Greece wanted to enter the European Union. For that, their deficit should be 3% of their GDP. They were not able to do so. Only Sachs group has helped Greece to cook the books by devising a special kind of swap with fictional exchange rates. Now, this problem was magnified in the form of European Sovereign debt crisis.
In 2007, when the housing bust began to take its toll on Wall Street, Goldman Sachs was the first to ask for bailout from the Federal Reserve and approached them to change their status to bank holding companies. Is it the right strategy of Sachs to portray them as a Commercial banker after diluting the savings of huge customers around the world?
During this time, American International Group, an insurance giant facing collapse due to its exposure to the mortgage crisis, was Goldman’s largest trading partner. A.I.G. received an emergency $85 billion bailout from the federal government. Apart from this, SEC has filed a suit against Goldman Sachs stating that they had wrongly structured a security called Abacus 2007-AC1 and generated billions of losses for Abacus investors. Under the settlement, Goldman paid back the profit made from the Abacus deal and also paid a civil penalty.
All these incidents clearly state the importance Goldman Sachs gives to profits and depict the culture of the organisation. I feel Greg Smith is clear about the future of Goldman Sachs in his Op-Ed column.
However, let us also listen to Lloyd Blankfein, “In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion. But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.” (http://www.valuewalk.com/2012/03/lloyd-blankfein-goldman-sachs-oped/)
I think, as an MBA student, it is for us to take a call on how we want our employer to behave! Let me know your thoughts on this.
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