Weekly Roundup: Banking, OpEds and Wall Street
Banking Gets A Beating?
Former Goldman Sachs employee, Greg Smith wrote an OpEd this week in the New York Times that highlights the malignant work culture at a company that he calls “morally bankrupt.” This outright acknowledgement from a mid-level employee has opened up a debate about the “new ethic” in the workforce, one driven by a desire to succeed. Of course, greed has always been part of society. In fact, a NYTimes piece made note of this, stating: “To be sure, longtime bankers say, it is not as if short-term greed was absent in the past. It has been around since traders gathered under a buttonwood tree and founded the New York Stock Exchange in 1792. But the astounding size of Wall Street’s biggest firms — and the fortunes to be made — have altered the calculus.”
So, where is the cancer in modern day greed? And how is it affecting society?
Atul Gawande commented on this new paradigm on Twitter, indicating that this problem isn’t exclusive to banking:
Shortly after the OpEd appeared, news agencies began reporting that Smith’s public accusations against GS cost them $2.15 billion. The Atlantic wire broke it down further to include the per-word damage: the company lost $2.15 billion of its market value, making Smith’s 1,283-word op-ed worth a whopping $1.675 million per word.
But, put aside the numbers. What has been the effect of Wall Street on society? Just months ago, we witnessed the global demonstrations of Occupy Wall Street. But did they make a dent? Or is one OpEd likely to make more impact?
Smith writes in his OpEd about young analysts absorbing the dialogue and tactics of senior employees at GS – a problem in the making, he would say. For years now, Wall Street has been able to allure the brightest students from American universities to work for them after college. The criticism has always been that students who may have gone on to explore other professions, depending on their interests, were distracted by the prestige and pay of the banks. But, with recent occurrences, could that change? The NYTimes reports that Wall Street may have a hard time snatching the best students going forward. That’s because the prestige has fallen, fewer positions are available, and the chase to a seven-figure salary has become harder in a cash-strapped America.
The attitude is changing on college campuses themselves, the article notes:
Adding to the chorus of dissent, students now face criticism on their own campuses. Groups of protestors at Yale and Harvard stood outside bank recruiting sessions last fall, shouting slogans and holding signs with messages like “Take a chance, don’t go into finance.” At Princeton, a group affiliated with the Occupy Wall Street movement interrupted sessions by JPMorgan Chase and Goldman Sachs, urging their fellow students to rebel against what it said was “the campus culture that whitewashes the crooked dealings of Wall Street as a prestigious career path.”
The piece goes on to include an anecdote from this week’s megaconference in Austin, noting that Wall Street hasn’t just been a bad ethical option, but has actually dampened American innovation in recent years:
At this year’s SXSW Interactive conference in Austin, Tex., a panel called “Keeping Kids off the Street: Wall St. vs. Start-ups” was convened to address questions including whether the finance industry was to blame for what organizers called a “failure to nurture a culture of innovation” in New York. Chris Wiggins, an associate professor of applied math at Columbia University who sat on the panel, said he was seeing students shy away from Wall Street and veer toward industries where they could work and profit without bringing their morality under the microscope.
Needless to say, the coverage of Smith’s OpEd has been intense. Forbes has run over a dozen articles in just the last few days that connect with the GS “bomb.” You can read them here. The comments on the NYTimes articles have been endless. This particular piece received nearly 600 comments; others have hit similar figures.
The question again is, will all this discussion and attention change the nature of the industry?