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This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. Goldman Sachs is once again defending itself against allegations that the company makes money by putting its own interests ahead of clients. This time, the accusation comes from one of Goldman Sachs' own.
Greg Smith, a Goldman employee in London, resigned publicly today on the op ed page of the New York Times. He wrote that the bank's culture is toxic and its employees talk callously about ripping off clients.
NPR's Yuki Noguchi reports that his criticisms immediately lit up Wall Street and the Web.
YUKI NOGUCHI, BYLINE: Until today, Greg Smith was a vice president and head of U.S. Equity Derivatives for the storied bank. In his resignation, Smith said the firm's moral fiber is in decline. He said Goldman executives would deride clients calling them Muppets, and then try to sell them on investments designed only to maximize profits for Goldman Sachs.
His piece caught fire. Twitter exploded with references to it. Parodies of I quit letters popped up and people like William Cohan gasped when they read it.
WILLIAM COHAN: Goldman's like the Stepford wives. OK? And never before has anyone sort of gone off the reservation like this and aired his views of Goldman's dirty laundry in public.
NOGUCHI: Cohan wrote a book called "Money and Power: How Goldman Sachs Came to Rule the World." He says none of the allegations came as a surprise.
COHAN: I think clients are well aware of this behavior already. They don't like it. They wish it weren't the case.
NOGUCHI: But, Cohan says, with fewer big banks left on Wall Street, they have few alternatives. Smith, who is in his mid-30s and is a 12-year veteran of the firm, could not be reached for comment.
Goldman's shares dropped three and a half percent. In a statement and in a memo to employees, Goldman denied Smith's portrayal of the company: quote, "in our view, we will only be successful if our clients are successful," end quote.
Just two years ago, Goldman paid more than half a billion dollars to settle a civil case. It had marketed mortgage-related securities without disclosing that another client had engineered the investment and was betting against it. That case landed Goldman executives in the hot seat.
At a Senate hearing lasting 11 hours, Senator Carl Levin questioned Goldman Chief Financial Officer David Viniar about internal emails disparaging a deal they were selling to clients.
SENATOR CARL LEVIN: When you heard that your employees in these emails were looking at these deals, said, God, what a (bleep) deal. God, what a piece of crap. When you hear your own employees or read about those in the emails, do you feel anything?
DAVID VINIAR: I think that's very unfortunate to have on email.
LEVIN: Are you...
(SOUNDBITE OF LAUGHTER)
NOGUCHI: David Colapinto is general counsel for the National Whistleblower Center. He says, although Smith did not bring specific allegations of illegal conduct, he was acting as a kind of moral whistleblower.
DAVID COLAPINTO: What is interesting about it is that he's still sounding an alarm bell about this culture of greed on Wall Street, which Congress was intending to change when they passed significant financial reforms. These problems have not gone away.
NOGUCHI: Colapinto says he hopes Smith's actions encourage other insiders to come forward to police their employers, but some securities experts say they don't think the open letter will have as much long term effect on Goldman as it will, say, on Smith's future in finance.
Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.