Why Greg Smith Is 'Dead Right' About Goldman Sachs

[Julian Englis]

From The Atlantic:

OK, so who do we believe? In a cover story in New York magazine last month melodramatically headlined "The Emasculation of Wall Street," journalist Gabriel Sherman made the case that the big financial firms were engaged in "something that might be called soul-searching" about their many sins and their wildly overcompensated contribution to the U.S. economy. Wall Street, under the whip of the giant Dodd-Frank law, was learning to behave. Reduced compensation packages and increased capital requirements were going to tame or snuff out some of the riskier and most reckless practices that brought the nation to the edge of a second Great Depression, Sherman wrote. Best of all, the domestication of Wall Street would redirect the best minds in the nation back into useful things like real engineering rather than financial engineering. Cool!

Now comes Greg Smith, an apparently conscience-stricken renegade from Goldman Sachs, who tells us that not only has nothing changed in the firm's culture, but he "can honestly say that the environment now is as toxic and destructive as I have ever seen it."

Can these two things both be true?

Actually, maybe yes. But the larger point is: We need to pay a lot more attention to Greg Smith than to Gabriel Sherman. There is, first of all, every reason to think Smith was telling the truth.

More here at: http://www.theatlantic.com/business/archive/2012/03/why-greg-smith-is-dead-right-about-goldman-sachs/254609/