Goldman Sachs’s long history of duping its clients

By William D. Cohan,
WashPost
Published: March 16

Greg Smith doesn’t know the half of it.

Smith, now the most famous former Goldman Sachs derivatives salesman on the planet, went off on his former employer in the opinion pages of the New York Times this past week — much to the amazement of nearly everyone — because he claimed that during his 12years at the firm, the ethics and morals of his co-workers deteriorated so dramatically that he just couldn’t take it anymore.

“I can honestly say that the environment now is as toxic and destructive as I have ever seen it,” he wrote. “To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

Guess what, Greg? You didn’t do your homework about the firm where you worked for more than a decade and happily took home one bonus check after another. Goldman Sachs has been in and out of trouble throughout its 143 years — chiefly because it chose to put its own interests before those of its clients. What appeared to be a revelation to Smith was actually available to anyone who looked for it, buried deep within Securities and Exchange Commission and court records. Smith could have saved himself grief if he had only used his Stanford education to examine Goldman’s DNA before crossing its threshold.

There are numerous examples of Goldman putting its own interests first. But one will suffice: the June 1970 bankruptcy of Penn Central Transportation Company, the nation’s largest railroad.

(More here.)