Former Goldman Sachs employee Greg Smith’s scathing New York Times editorial, in which he announced his resignation from the firm and decried its “toxic and destructive” atmosphere, has sparked a host of reactions in the United States, where Goldman was at the center of the financial collapse that engulfed the economy in 2008.
But Goldman also has an extensive business portfolio in Europe (Smith was based in London), and this morning, two members of the British Parliament slammed the bank for the practices outlined in Smith’s piece, the London Evening Standard reports:
Former Liberal Democrat Treasury spokesman Lord Oakeshott said: “We all know in the City that Goldman help themselves before they help their clients — here is the proof. Greg Smith says you get promoted there if you are not an ‘axe murderer’, and the people of Greece and the rest of the eurozone (sic) are paying the price.”
Labour MP John Mann, a member of the Treasury select committee, said: “At last somebody has come out and exposed what has been really going on. There is a real challenge to the Government to sort this out and make sure the banking industry is properly focused on its customers.”
As Oakeshott noted, the Eurozone, and Greece in particular, are paying a hefty price for their dealings with Goldman Sachs, which organized a debt swap deal with the Greek government in 2001. Goldman made hefty profits — on the day the deal was finalized, Greece already owed the bank $793 million — while Greece eventually plunged into a debt crisis that has spread across Europe. The deal was so complex that Greek officials weren’t aware of how bad a bet they had made until years later.
Members of Parliament weren’t the only ones set ablaze by the editorial. Speculation has spread that Smith’s expose could cause Goldman’s clients to flee the bank. It’s stock price dropped three percent this morning, and Rolling Stone’s Matt Taibbi, who has written extensively about Goldman Sachs, wrote that the editorial might be exactly what is needed to cause “real change” on Wall Street. And despite the bank’s best efforts to quell the criticism, others have mused that the fallout from the editorial could even lead to the ouster of CEO Lloyd Blankfein.
