‘Dear John’ letter provokes media skirmish

Timing is everything. Back in the bleak spring of 2010, at a Manhattan penthouse cocktail party, I asked a buttoned-down guest what he did for a living.

“I work for a TARP [troubled asset relief program] bank,” he confessed uncomfortably, and it was only half a joke. It took him another thirty minutes to admit that he was employed by Goldman Sachs. Had it been 2007, he would have been the star guest.

Two years ago, however, it was no longer cool or glamorous to work for the Giant Squid. Matt Taibbi’s article had gone viral, capturing the bitterness of the era. Few cared that the Rolling Stone piece was little more than a “a bloodsucking caricature,” as Daniel Ben-Ami aptly described it.

But when the New York Times published Greg Smith’s disillusioned resignation on March 14, reactions were a far cry. Smith, a 12-year Goldman veteran, and former executive director and head of the firm’s US equity derivatives business in Europe, the Middle East and Africa, castigated the culture of his ex-employer, and how it “sidelines” clients’ interests. A chorus of defenders volleyed back to discredit the Op-Ed: Smith was just a midlevel executive, passed over for the highest echelons, sophisticated clients can take care of themselves and keep coming back anyhow, there’s a distinction between trading clients and banking clients, and the story was old hat, etc. They did not dwell on the betrayal of Goldman’s first Business Principle, inculcated officially into every employee: Our clients’ interests always come first.

Some criticised the New York Times, accusing the paper of liberal bias or a pathetic attempt at relevance or rabble rousing. That’s right, blame the messenger. The Times’ mistake may have been losing touch with the zeitgeist – to wit, Goldman’s market value, which took a $2.15 billion (£1.6 billion) bath after the article’s publication, has bounced back smartly. Yet the Smith affair is morphing into a media war. One wonders, did the Times publish in order to scoop the Wall Street Journal, who might have grabbed the story otherwise? And why is Mayor Bloomberg, another media rival, so avid in his defense of Goldman Sachs?

Vanessa Drucker is the American Editor of Fund Strategy, based in New York City.  She has worked as a financial journalist for 20 years. In the 1980s, she practiced banking and securities law on Wall Street, and is the author of two business novels. Vanessa can be contacted at vanessa.drucker@centaur.co.uk.