A banker who decided to stand out

On Friday I visited Stanford bookstore, which is a awesome place for a book lover. One of the books that sticked to me was was by the man named Greg Smith. Earlier this year, as some people might recall, he did cause  a lot of commotion because of the following: On the march 14, 2012 a Goldman Sachs executive Greg Smith published an op-ed article[1] claiming that the culture of his company has, since the dawn of financial crisis, shifted from being customer centric into a kind of predator culture, where the interest of traders comes first (making money) and where customers needs comes last. In the book published later that year Smith tells in a nutshell the story of the financial rollercoaster that the Western world experienced in the course of the financial crisis, now extended to public debt crisis.[2]

Smith points out how it was exactly the culture of the company that had helped Goldman Sachs to stand out among peers and become world most powerful investment bank.  In those days, it was the culture of humility, respect for the facts and principle to take advantage of the customer in any dealings. In other words, the earlier GS did promote the ethics of integrity and transparency.  Smith noted that all of this eroded as people in the company started – in the face of the crisis – to protect their own earning at all price.

The story is symptomatic for today’s world of economic downturn. The mood of the markets and people have seriously flawed and future seems rather gloomy for most of the people.  As the students of socionomics know, social mood has a certain anticipatory power to forecast what actually happens in the market place[3]. Most of the assessment regarding the future options for European economy in particular do not see much light at the end of the tunnel.[4]

As such, the author provides an interesting insight into the obscure world of investment banking, similar to what "city boy" did some years earlier. The last point of the author is also rather interesting:  there has been no effort to bring those people under justice, who caused enormous losses to ordinary people as well as to such institutions as pension funds.
In the aftermath of Great Depression in the 1930's,  when Wall street also caused economic upheavals, the US senate conducted the Pecora hearings to research the causes of the crash. It was done with the result that  banks were held accountable and the rules of the game changed.  This time seems to be different.

[2] Greg Smith (2012): Why I left Goldman Sachs. Grand Central Publishing, New York

[3] John Casti, Mood Matters (2010): From Rising Skirt Lengths to the Collapse of World Powers. Copernicus Books, New York, 2010.

[4]  See IMF latest Financial Stability Board Report, http://www.imf.org/external/pubs/ft/gfsr/2012/02/index.htm