Stephen Foley: While millions cast aspersions, Greg, I believe you. But, tell me, why now?

 

US Outlook Call me, Greg. Three days after your explosive resignation letter, lobbed like a grenade over your shoulder as you walked out the door of Goldman Sachs, and you are being traduced across the City of London and Wall Street.

I'm sure you expected to be branded a traitor for calling Goldman on the "toxic" culture you saw around you, and perhaps you realised people would suspect your motives. Obviously, you knew some people would angrily disagree with your characterisation of the firm – not just the Kool-Aid drinkers and the spin doctors, but thousands of Goldmanites, too.

But did you realise this: that people would say even you don't believe what you wrote? That your New York Times piece was, in effect, a lie?

All the conversations about whether you are a hero or a villain, a whistleblower calling it like it is, or a guy who wanted to punish his bosses for giving him a paltry bonus – all those conversations among people who know nothing about you – are haunted by the question: why now?

You'll have noticed cynics pointing out how you made your move during "quitting season", those few weeks after last year's bonuses are paid. Maybe you've seen that graph, plotting "Right to bitch about banking" against "Years that one has received a bonus more than 50 per cent of base pay" and suggesting that you, after 12 years, are at the low end of the curve. Much of the invective has mocked you for being shocked, shocked to find that gambling and short-term profit making are what gets Goldmanites promoted.

The implication is that few people believe you when you write that the environment at Goldman now is "as toxic and destructive as I have ever seen it" and that the culture has "veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for".

Maybe the culture changed when Goldman decided to abandon its old partnership structure and go public in 1999, before you arrived. Maybe the excesses of the mortgage bubble in 2007 and 2008 marked a new low for moral standards. But now, in 2012? The suggestion is that you have invented a 12-year, straight-line moral decline (and the notion that Goldman traders are disrespecting their clients as "Muppets" with greater frequency today) simply in order to justify your exit and your bid for journalistic superstardom. Simply to answer that haunting question, why now?

Except that I don't find your claim of a 12-year moral decline implausible, not in the slightest.

Let's not forget what you did at Goldman. You traded US equity derivatives. As derivatives go, they are among the plainer financial products. Even Warren Buffett uses them. You would have witnessed, in the first two-thirds of your time there, the explosive growth of much more complicated products – the "illiquid, opaque products with a three-letter acronym" that you complain about, and from which Goldman and the rest of Wall Street extracted unprecedented multi-billion dollar profits in the years leading up to the bust. Illiquidity and opacity is precisely what allows middle-men like Goldman to "rip the faces off" their clients, even the most sophisticated Muppets.

It was from this business that we got the likes of the "Fabulous Fab", the Goldman trader Fabrice Tourre who boasted of selling to "widows and orphans ... all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

And let's not forget what has happened since the bust. Those most exotic corners of the derivatives business where you worked are now gone, and clients are much more sceptical about that which remains. It is already harder to make money, as you can see from the 47 per cent slide in Goldman's profits last year and the one-fifth cut to its bonus pool. And it is only going to get harder. Regulators have closed in to demand greater simplicity, lower leverage and to scale back banks' trading under the forthcoming Volcker Rule.

In those straitened circumstances, it doesn't seem implausible to me that traders are focused more on squeezing what they can from the business that remains, before the jig is completely up.

Millions wouldn't this week, but I believe you, Greg. Just let's answer that haunting question, why now? Give me a call.

s.foley@independent.co.uk

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