Arthur Levitt, the former Securities and Exchange Commission chairman and a senior adviser to Goldman Sachs, says no one puts customer’s first and the firm should stop saying they do. He says this in response to Greg Smith’s op-ed published on the day of his departure from Goldman Sachs. Smith, of course, said that Goldman Sachs was disrespectful of clients and did not put their interests first. Levitt thinks it is wrong to expect financial services firms to put the interests of clients ahead of their own. That would be unreasonable, and anyone who doesn’t understand that is just too stupid to even be doing business, apparently. Levitt said, “That’s not to stay that buyers should beware. It is to say there should be transparency. But on the other hand, let’s not create a fellowship of buyers and sellers that will march into the sunset.”
What he is saying, I think, is that the most successful firms are also the most ruthless. If they put their clients first, they will fail. This is the same reason so many athletes use performance-enhancing drugs. It isn’t that it is right; it is just that everyone is doing it, so it has become necessary to compete. More regulation and oversight might help financial services, but this doesn’t seem to occur to Levitt.
But it does occur to Matt Taibbi, reporter for Rolling Stone magazine. Way back on May 11, 2011, Taibbi reported on Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. From Taibbi’s article:
“But the mountain of evidence collected against Goldman by Levin’s small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street’s aristocratic impunity and prosecutorial immunity produced since the crash of 2008.”
But we shouldn’t be too critical, right?
It seems absurd to even have to write about this in an ethics blog. Is there any ethical question here? The fact that anyone would defend fraud and client abuse is a sad indication of our current state of moral decay. How do we revive a sense of honor and decency in corporate executives? How do we weave a new moral fabric and replace the one that is soiled and rent?