Business Week quotes numerous congressional Democrats in stating that “the Goldman Sachs Group Inc. employee who criticized the company’s culture in a newspaper column bolsters the case for Wall Street restrictions like the Volcker rule.” Such legislators as Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.), the two Democrats who co-authored the Volcker rule’s ban on proprietary trading and conflicts of interest in the Dodd-Frank Act, are among those who have said ex-banker Greg Smith’s scathing editorial strengthens the case for restrictions on Wall Street trading. Merkley noted that Congress cannot “legislate the culture, but I think the heart of this goes to why we needed the Merkley-Levin amendment.” Goldman Sachs’ business practices and CEO Lloyd Blankfein were the targets of congressional hearings two years ago. Smith’s piece questioned the firm’s culture, stating “the interests of clients continue to be sidelined in the way the firm operates and thinks about making money.”
CNBC notes that Goldman Sachs is also drawing criticism from various international interests. Chief among them is APG, one of Europe’s largest asset managers. According to CNBC, the Dutch investment adviser “lashed out at Goldman Sachs for not communicating quickly enough with clients after Smith publicly condemned the way the bank treats clients.” APG notes that it took the Wall Street bank more than a day to offer APG any reassurance on points raised in the column. APG spokesman Harmen Geers said, “We would have expected that a company that faces such a big media backlash over something so core to their business such as client trust would have instantly reached out to those clients to say something.” After the editorial ran in Wednesday’s edition of the Times, Blankfein and COO Gary Cohn did issue a memo to staff describing the views of former vice president Smith as “foreign” to most of his 12,000 peers. Blankfein also reportedly sent Goldman Sachs employees a voicemail on March 14 urging them to reach out to clients.
Others have taken a more understanding approach to the matter. The Denver Post notes that “JPMorgan Chief Executive Jamie Dimon warned employees not to seek advantage from competitors’ ‘alleged issues’ after [Smith] sparked a firestorm by charging that Goldman managing directors viewed clients as ‘muppets.’” Dimon’s memo also urged staff to focus on their own bank’s standards.