Greg Smith quit on Wednesday. He worked for Goldman Sachs (NYSE: GS). This was important enough to him, and to The New York Times, to run an op-ed piece that captured the financial world's fickle interest on an otherwise slow news day. Goldman rips its clients off, Smith says. It's not the people-first investment bank with a heart he used to know. They've lost their way, their culture, their ethics, and their precious integrity. He had to quit for his conscience and his pride.
I'll wait for you to finish laughing.
There are many commentaries now available on the saga of Greg Smith and Goldman Sachs. The most stunning, mind-boggling thing to come out of this whole charade, in my mind, isn't that Smith gave us chattering classes a peek inside the belly of the "vampire squid," but that virtually no one pointed out the cowardice of doing so when it no longer matters. Heidi Moore wrote a column in which Smith is anointed a 99 percenter for his defiance, despite the fact that by his second year of employment he was probably making 1% money. Matt Taibbi, who coined the term "vampire squid" and has a best-selling book devoted to how evil it is, called him brave. At least Ezra Klein points out, rightly, how self-indulgently narcissistic (not to mention late to the party) Smith's diatribe is.
No one seems to express real outrage that the cutthroat mercenary attitude Smith complains about is the same that tanked the economy years ago and which seems to have been allowed to grow and fester unchecked and unpunished in its aftermath. Smith could have stood up in 2005 or 2007 and pointed out to the public that his employer was trying to rip the faces off its own clients. But no one really cares about that, apparently. No one's angry. Everyone seems resigned to it, like bad weather that won't go away. Some even support it.
Smith was careful to disavow any knowledge of illegal behavior, despite numerous books, articles, and Senate hearings full of allegations that Goldman and other "too big to fail" banks encouraged it and then swept it under the rug with a broom made of borrowed money. The day before Smith's letter made waves, Goldman quietly hired a former Bear Stearns mortgage executive personally named in federal fraud lawsuits. It must be confident he'll get off to have offered the job.
What are the positives to this little media circus? Well, we might get more support for the Volcker rule. Yes, that Volcker rule, a 500-plus page regulatory monstrosity stuffed so full of lobbying concessions it's impossible to tell what it will actually do in practice, which means it might very well do nothing except pay for a few more lawyers' salaries.
Despite presiding over the aftermath of one of the largest, most widespread episodes of financial malfeasance in modern history, the present administration has prosecuted less than half as many fraud cases annually as prior administrations had over similar time frames. No one was talking about any of that on Wednesday. It was all about how widespread the con is and how we might as well just shrug our shoulders and get used to it. Of course banks want to make money! Of course they'll blow up the economy to do it. What can we do?
We could let them start paying dividends and buying back shares again, as JPMorgan (NYSE: JPM) promised to do the day prior to Smith's diatribe, after pre-empting the Federal Reserve's stress test results by two days to announce it had passed. We could talk about how JPMorgan already jacked its dividend up to pre-crisis levels a year ago as part of a broader banking sector pre-test payout boost a full year in advance of the stress test results. This came despite regulatory warnings that banks should continue to stockpile capital, just in case they might do something else to blow up the economy. If you don't remember what a big issue this was, it's because the situation only got a brief bit of airplay about a week ago, before the financial media got bored and went back to talking about how many small countries or hamburgers or whatever Apple could buy with $100 billion.
Apple can do whatever it wants with its money, since it's never been responsible for a global meltdown and has no responsibility for the financial welfare of others. But we should care what JPMorgan does with its money, and what other banks do with theirs, not least because so much taxpayer largesse has flowed into bank coffers with virtually no oversight, and certainly not least because the way the Fed distributed that money played such a critical role in building the JPMorgan and other "too big to fail" banks we know today. When the dividend went up, no one was talking about how JPMorgan sold many of its own credit card clients out to debt collectors without bothering to see if they actually, you know, owed the bank any money. This was reported the day before the dividend boost and received virtually no media attention.
Yet idle speculation about Apple's gigantic pile of money has been played over and over and over, while report after report of financial-industry psychopathy seems confined largely to the blogs of cranks and conspiracy theorists, who've been warning for years that nothing's changed and we're still on an inevitable road to destruction. As the economy improves and the unemployment rolls shrink, most reactions to this drumbeat of doomsaying have become patronizing or dismissive, as might be expected. But they are right -- nothing really has changed. The psychopaths are still in control, if anything more powerful than they were before the crash, and if anything somehow less accountable.
Can we really muster nothing better in response to finding out that nothing's changed besides a shrug of the shoulders? Are we really going to pretend that a toxic culture on Wall Street isn't poisonous to the rest of the country, and the world? Oh, hey, look! It's a new iPad!
