Thank goodness for bootlegs. Er, rather ... advance copies.
Because while ex-Goldman Sachs (NYSE:GS) trader Greg Smith's new tell-all memoir, Why I Left Goldman Sachs: A Wall Street Story, just hit the stores yesterday, enterprising journalists managed to get their hands on unofficial copies over the weekend and have already reviewed it. The consensus? There's nothing revolutionary or particularly bank-shaking contained therein. As such, it seems that Goldman investors can breathe a sigh of relief.
Goldman just loves Miss Piggy
If you recall, this past March, Smith published an angry missive in the The New York Times, blasting the bank for its "toxic" and "destructive" environment. But the most stinging criticism, or at least the one the bank and public took the most notice of, was Smith's charge that some Goldman employees called their clients "muppets." (In British slang, "muppet" means "fool," and Smith worked in Goldman's London office .)
In response to the widely reported-on op-ed piece, Goldman launched an internal investigation into all the charges Smith made. The result? Little evidence was found to support his allegations. Specifically, of the 4,000 references to the word "muppet" found in millions of emails, only one referred to clients as muppets; the rest were all references to the 2011 movie The Muppets.
Who knew employees of the Great Vampire Squid would be so taken with Kermit, Miss Piggy, and Fozzie Bear?
Why he really left
As the release date for Why I Left Wall Street approached, however, Goldman was apparently bracing for the worst. In a pre-emptive strike against Smith, the bank revealed that, just months before he quit, Smith was angling for both a promotion and a raise. He didn't get either, but if he had, he would have been set to make more than $1 million per year. Smith was a derivatives trader at Goldman, one of the most lucrative positions you can hold at any investment bank.
According to The New York Times, the book repeats the charges against Goldman as first laid out in Smith's op-ed piece but offered "few new details of the 'toxic' culture that he said prompted him to quit."
Of London Whales and muppets
As banking scandals go, at least this one has had an element of fun. Not so much others in recent memory:
- Bank of America's (NYSE:BAC) recent $2.4 billion shareholder settlement for the botched handling of the Merrill Lynch acquisition in the heat of the financial crisis comes immediately to mind, but where's the fun in that? There's no reference to puppets or large seagoing creatures, just B of A hiding massive Merrill losses from investors in the time leading up to the purchase.
- JPMorgan Chase's (NYSE:JPM) recent derivatives trading debacle competes with Goldman's great Muppet caper on sheer silliness of name -- the Tale of the London Whale -- but it definitely gets serious when you consider what that whale is going to cost the bank: close to $6 billion.
- Finally, Citigroup's (NYSE:C) recent ouster of CEO Vikram Pandit at least has some air of mystery about it. No one has yet been able to pin down precisely what happened in that abrupt departure: Did Citi fire Pandit, or did Pandit fire Citi?
But for right now, Foolish readers, we have muppets, and for that we should be grateful. Because in the past four years there's been very little to be grateful about in regard to America's biggest banks. If some occasional references to clients as muppets is the worst charge that can be leveled against Goldman four years after the financial crash, that's a bargain.
Thanks for reading and for thinking. While you're here, check out our new in-depth report on Bank of America. I can't promise you muppets, but I can promise you it concisely details B of A's prospects, and it highlights three reasons to buy and three reasons to sell. Just click here to get access.