The question that immediately came up for me was: "How did this transition from serving the clients to using and even abusing them happen so quickly?" Greg Smith was only at Goldman for 12 years, but in that time he saw a shift of attitudes and ethics of 180 degrees. So, what propelled this rapid transition towards greediness and total disregard for the clients? It's almost as if Ayn Rand had arisen from her grave and been appointed CEO of the company. Suddenly, everybody is on board with calling customers 'muppets' and selling them lousy investments or at the very least putting the customers investment goals last.
My best guess is that such a total and sudden transformation can only come from the top down. This kind of shift doesn't come from the ranks; it comes from the managers and executives who set the tone for how the account execs operate. The new 'wunderkind' who arrive, fresh out of Harvard Business School, or Wharton, or--nowadays--from elite computer science programs at top universities, come on board with dreams of multi-million dollar bonuses, making their fortunes before they're 30, having a Gulfstream parked out at Teterboro, ready to whisk them off to Aspen, Barbados or Paris on a whim. No doubt about it. They have been carefully 'chosen'--in the true sense of the term, 'chosen few'-- from a bumper crop of brilliant achievers to become the Elite. And, they arrive ready to take whatever cues and pointers will help them to fulfill this dream.
So, when the middle and upper levels of management model a financial philosophy that says, in essence, "anything goes, just make us a ton of money", the result is easy to predict. The young Turks of Wall St. bend to the task of skirting inconvenient regulations...what few are there....and become ingenious at creating such things as 'Credit Default Swap' instruments that allow them to pre-package lousy mortgages and pawn them off to even their best clients as solid investments. Well, we all know how that worked out. But, we also know that nobody has been held accountable for all of this 'creativity' either.
If Ayn Rand really was sitting in the top floor corner office...the one with a good view of the Hudson....she would be feeling very pleased and proud of her new crop of brokers. They have learned what she wanted them to, and they are applying the ruthless principles of the pseudo-philosophy that she created: Objectivism. The essence is not difficult to grasp. It simply says that getting what you want, the practice of unbridled greed, is a superior path in life, and one for the strong and ruthless, who are destined to become the ruling elite.....because they have the power that only great wealth can buy.
The traditional approach to business was just so much foolishness, a path for the weak. Offer a good product or service at a fair price and stand behind it. Practice personal and professional integrity in all matters. Really? Why would I do that if my intent is simply to amass wealth in the quickest and most efficient way possible? Such a code of conduct is not merely inconvenient; it's a real impediment to my goals, therefore must be ignored. The practice of greed, at its most advanced levels, is not for softies who care about others. It is for the strong and requires that one be willing to do whatever is necessary.
And, it was the exact same essential concept that Himmler preached to his legions of SS, in order to get them to go out and perpetrate the Holocaust. He actually sympathized with them having to take on such an odious task as the murder of millions. And, he asked them to 'steel yourselves' because it had to be done for the Fatherland. To this day, people wonder what was in the hearts of people who could act so utterly without conscience. And, now we are seeing the culture of me first, to hell with you, rising again. This time it's intent on having--and already has--the vast majority of the wealth in our society...worldwide. It's a different kind of hegemony....but it's domination all the same.
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