From Nomi
Prins, former Managing Director at Goldman Sachs and aithor of It Takes A
Pillage
My Statement Regarding Greg Smith's Goldman Resignation
My Statement Regarding Greg Smith's Goldman Resignation
Today, I have
received dozens of media requests and hundreds of emails regarding former
Goldman Sachs executive, Greg Smith's gutsy, and internationally resonating, public
resignation.
I applaud Smith's
decision to bring the nature of Goldman's profit-making strategies to the
forefront of the global population's discourse, as so many others have been
doing through books, investigative journalism, and the Occupy movements over the
past decade since my book, Other
People's Money, was written after I resigned from Goldman. It would be great
if Smith's illuminations would serve as the turning point around which serious
examination and re-regulation of the banking system framework would transpire.
The inherent conflict of interest that firms such
as Goldman possess through enjoying the multiple roles of 'market-maker,'
'securities creator' and 'client-advisor' foster an environment rife with
systemic risk. The trading revenue portion of Goldman's profits, as well as its
derivatives vs. assets ratio, is the highest amongst the American bank holding
companies. And yet, in the fall of 2008, the Federal Reserve approved Goldman
Sachs (along with Morgan Stanley) to alter its moniker from investment bank to
bank holding company, thereby allowing it to gain access to federal subsidies
and potential ongoing support.
In this regard, the firm's practices should
remain under intense scrutiny by the general public and legislators. I would
hope that the message behind Smith's resignation will not be obfuscated by
debates over the extent to which the firm's clients are either supported or
exploited, but instead, serve as a powerful call to foster a more-strictly
delineated and less reckless financial system.
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