Greg Smith, a former employee of Goldman Sachs, has just written a book titled Why I Left Goldman Sachs: A Wall Street Story. Unfortunately, it doesn’t properly explain what went wrong, according to another Wall Street refugee Michael Lewis in his review of Smith’s book
In 1989, Lewis wrote Liar’s Poker, a pioneering exposé of Salomon Brothers. And he finds Smith’s book a statement of the bleedin’ obvious, which would have been more useful had it been published before the financial crash.
Lewis gets to the heart of the matter:
Stop and think once more about what has just happened on Wall Street: its most admired firm conspired to flood the financial system with worthless securities, then set itself up to profit from betting against those very same securities, and in the bargain helped to precipitate a world historic financial crisis that cost millions of people their jobs and convulsed our political system. In other places, or at other times, the firm would be put out of business, and its leaders shamed and jailed and strung from lampposts. (I am not advocating the latter.) Instead Goldman Sachs, like the other too-big-to-fail firms, has been handed tens of billions in government subsidies, on the theory that we cannot live without them. They were then permitted to pay politicians to prevent laws being passed to change their business, and bribe public officials (with the implicit promise of future employment) to neuter the laws that were passed—so that they might continue to behave in more or less the same way that brought ruin on us all. And after all this has been done, a Goldman Sachs employee steps forward to say that the people at the top of his former firm need to see the error of their ways, and become more decent, socially responsible human beings. Right. How exactly is that going to happen?Lewis advocates breaking up the too-big-to-fail banks into smaller units. He concludes:
The ultimate goal should be to create institutions so dull and easy to understand that, when a young man who works for one of them walks into a publisher’s office and offers to write up his experiences, the publisher looks at him blankly and asks, “Why would anyone want to read that?”This is a somewhat more robust stance than George Osborne’s.