Goldman Sachs logo with bag of gold by watertiger

(image: watertiger)

I found the Bloomberg editorial response to Greg Smith’s resignation letter from Goldman Sachs to be so terrible that ironically I think it is a more damning criticism of the current destructive culture on Wall Street than Smith’s original piece. The editors at Bloomberg basically try to paint Smith as naive and stupid, then conclude by saying:

We have some advice for Smith, as well as the thousands of college students who apply to work at Goldman Sachs each year: If you want to dedicate your life to serving humanity, do not go to work for Goldman Sachs. That’s not its function, and it never will be. Go to work for Goldman Sachs if you wish to work hard and get paid more than you deserve even so. (Or if you want to make your living selling derivatives but don’t know what a derivative is, as Smith concedes in passing that he didn’t at first.)

Goldman and other investment banks do perform an important role in our economy, and Goldman bankers — most of them, at least — can hold their heads up high. But it is not charity work. Goldman’s clients are mostly very well-off. Smith’s lament that the bank no longer serves their needs above and beyond its own does not tug at our heartstrings.

This is the heart of the problem with Wall Street right now. The editors at Bloomberg apparently don’t understand the basic principles by which a good service exchange is supposed to work. This client-company relationship should not be a competition, ideally it should be mutually beneficial arrangement.

How the system is supposed to work is that Goldman Sachs would do the best financially by helping their clients do their best. There should not even be a question about putting the clients’ needs above Goldman’s or Goldman’s needs above the clients. Their goals for the most part should be mutually interdependent and self re-enforcing. It should be a a symbiotic relationship not a parasitical one. There is a very real difference between making money providing an expensive service and running a con.

Smith seemed more than willing to help make a lot of money in exchange for providing clients with a good service, Smith was complaining that Goldman was basically ripping people off. Smith’s criticism is that Goldman was not providing its clients what they paid for, the best possible financial advice, and was also using their trust to trick them out of their money.

This Bloomberg editorial suggests it is incredibly stupid to ever expect a Wall Street company to actually try to provide you with the service that you pay them for. If this is truly what the elite business world thinks this is not only an acceptable but expected way to treat paying clients, then Bloomberg makes Smith’s point for him.