Former Goldman Sachs manager Greg Smith set Wall Street on fire last week when he used an editorial in the New York Times to announce his resignation and blasted the firm’s “toxic and destructive” culture that led traders to mislead customers in an ever-present quest for profits. The reaction from Wall Street was predictable — Goldman mobilized a massive smear campaign against Smith, saying he was upset with the size of his bonus and lack of promotion, and its claims were amplified with anonymous accounts filtered through the financial media.
Now, however, another former Goldman employee is speaking out. Jacki Zehner, who was the youngest woman and first female trader to make partner at the firm, left Goldman in 2002. On her own blog, Zehner wrote that Goldman suffered a cultural change that led it to promote employees who were “commercial animals/jerks” over those who were consumer oriented, as the Washington Post’s Suzy Khimm noted:
These structural changes ended up changing the culture of these firms as well, which was one of the reasons Zehner ultimately left Goldman. Colleagues who were “commercial” — e.g., pushed for the firm to profit over other considerations — were being promoted over those who were customer-oriented, she explained, decrying the “commercial animals/jerks” at the firm. “I sat and listened to arguments about how commercial people HAD to be promoted despite being poor team players, downright jerks or much more. That really pissed me off,” Zehner writes.
Zehner also acknowledged that one side effect of that culture change was the creation and sale of “so much junk” in the form of subprime mortgages, mortgage-backed securities, credit default options, and other complex financial instruments that ultimately led to the collapse of the housing market and the subsequent financial crisis. Like herself, Zehner says other customer-first Goldman employees left the firm because they couldn’t “sell the crap they were being asked to create“:
So much junk was created that should never have been with disastrous consequences and that will be a black mark on the whole industry for a long time, as it should be. That in and of itself is testimony to the industry in general having lost its way. When you create toxic waste and market it as if it is was not, you are indeed harming your moral fiber. I know many people who were in ‘that business’ who quit because they could not in good faith sell the crap they were being asked to create and market.
Goldman Sachs, of course, disputed Smith’s characterization and likely isn’t fond of Zehner’s either. CEO Lloyd Blankfein has said the firm is “doing God’s work,” and in responding to Smith’s editorial, said, “We will only be successful if our clients are successful.” That, however, doesn’t sound like the Goldman Sachs Smith and Zehner describe, the firm whose employees chortled about the “shitty deals” they were selling to consumers, or a part of the Wall Street culture a JPMorgan Chase whistleblower described when he said that exploiting customers was “the purpose of the banking organization.”