I left Goldman Sachs in 2002 after a 14 year career, a career I was very proud of. Like so many others that went on to make partner I started as an analyst, and worked my way through the ranks. I did not come from "money" not did I view my reasons for being to make it. In a survey Catalyst did on why people work on Wall Street the number one answer was in fact - challenging and meaningful work that allows one to use their intellect in dynamic ways. That was true for me and for the vast majority of people I came to know and respect at Goldman. Sure money was important, but it was not all about the money. In this article Mr. Arlidge clearly states it is.
Reading this piece I kept asking myself was he really talking about Goldman? Is the author just extremely biased, or has so much changed in the 7 years that I have been gone? Yes I did notice that over my tenure there the firm was becoming more money centered, and in fact that was one of the reasons I left, but if the firm is truly as money obsessed as he suggests I worry about the long term viability of the firm, and so dear shareholders, should you.
The authors main criticism is over outsized compensation and earnings. There is no doubt that compensation has skyrocketed over the past decade. The reasons for that have been written about extensively but cheap money created an explosion in the size of the financial services sector- and GS is the best there is in the sector. In the meltdown GS was smarter then the rest in not losing money, and because everything got cheap when the financial markets nearly came to an end, and GS got billions of free money, they loaded the boat and are now enjoying the benefits. Should there be a tax on that success because GS was saved, and yes Lloyd you were saved... not for me to decide but likely not. I mean really, how do you do that "fairly"? If you incrementally tax GS then you need to tax others than benefitted as well. ( and let us not forget they will pay a boatload of taxes which we desperately need ) The system needed saving and the government gave a lot of players the tools to do so, and GS did it better then most, but they are not the only players printing money.
That being said, GS should do something on their own, and do it fast, to benefit the common good. Why? Because it makes good long term business sense. ( Though I do wish the pastor they mention - and by the way my husband, an ex GS partner is one too - would speak to the management committee - as well as an external audience - about the ethics of how you can make much money and more importantly, what to do with your money when you make so much.)
So what should GS do with all that money? They could pay themselves less, and pay more out in dividends, which seems to be the most obvious thing to do, but a big charitable investment might make sense too. Yes they have done this already with the 10,000 Women's Initiatives, but it seems like it is time for something else, and specifically around job creation. Last week I sent a meeting request to a very senior person at the firm hoping to meet around this idea... but so far, nothing. In case I can't get that meeting I want to go on record as saying this - Goldman, use your resources to do something, something big, around job creation. This is the number one issue in America right now and we need your help! I do have ideas and will gladly wait in line to share them.
Why should they do this? Because at the core of GS business principles, which you can read here , is the protection and enhancement of the firm's reputation, and it is badly damaged right now.
Principle number two:
"Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard. "
You can read the rest but the principles are there to balance profit motivation with a sense of what is right and it does seem that GS is indeed out of balance. Yes Goldman exists to make money, but it does not only exist to do that.
In closing I spent 14 years at Goldman, my husband 15, and it was truly an exceptional place to work. Though we have been gone a long time, it breaks my heart to read stories like the one referenced here. I truly hope that GS responds to all this negative press in a positive way, and chooses to mobilize resources to help our country deal with the huge mess we are in. Why? Because that is what the firm's business principles calls them to do.