(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Peter Thal Larsen
LONDON (Reuters Breakingviews) - Greg Smith's biggest impact on Goldman Sachs may have been the manner in which he departed. On Wednesday, the equity derivatives banker kissed goodbye to his employer of a dozen years with a resignation letter, published in the New York Times op-ed pages, in which he accused Goldman of putting its interests ahead of those of clients, who he said are regularly described as "muppets."
Though Smith's complaints may be familiar, they tend to be aired in private. The worry for Goldman is that some employees are no longer scared of criticising the firm, nor take much pride in its pedigree.
It's not hard to pick holes in Smith's broadside. His Goldman career doesn't seem to have been stellar. After more than a decade he was still an executive director when most bankers would hope to have made it to managing director or even partner. And his misty-eyed description of Goldman's principled past sounds stretched. When Smith joined, Goldman - and the rest of Wall Street - was flogging speculative Internet start-ups to tech-mad investors - hardly a case study for prioritising clients' long-term interests.
And Smith's description will hold few surprises for those familiar with the Securities and Exchange Commission's case against the firm over its structuring of toxic sub-prime mortgage debt, or the Senate report that highlighted an executive's emailed description of a "shitty deal" shunted to clients.
Indeed, the complaint that Goldman puts its own interests first can be regularly heard from customers, counterparties and even ex-employees. If Smith's letter is an accurate reflection of reality - he offers no specific evidence - it is just another reminder of how far Goldman still has to go in rediscovering former senior partner Gus Levy's mantra of being "long-term greedy."
What's unusual is for criticism to spill into the open. Despite its recent travails, Goldman has managed to keep internal disputes private, while even disgruntled clients have tended to keep quiet. Goldman's famed ability to maintain close links with its alumni - who in the past wore their tenure as a badge of pride rather than disavowing it the way Smith has - also persuades most ex-employees to keep their counsel.
Smith's chances of continuing a career in finance look slim. Rivals will think twice before hiring someone willing to air his dirty laundry. But for Goldman, which just named a new communications chief, the challenge will be discouraging others from following Smith's lead.
Editing by Rob Cox and Martin Langfield