According to Matt Yglesias, Greg just doesn’t get it.
Once upon a time Goldman was a firm that was pretty overwhelmingly in the business of advising clients. It’s hard to succeed in the client-advising business unless clients feel that you’re giving good advice. But over the time span Smith is describing, this whole portion of the business has shrunk relative to trading. This means that whether or not the advice is good or clients are happy or there’s a perception of ethical behavior is all just less and less relevant to the operation of the enterprise. Companies shift their focus all the time and it would be the most natural thing in the world for executives affiliated with the declining side of the business to resent the change.
Smith’s clients thought they knew where Goldman was making its money when it sold them equity derivatives. Nine times out of ten, they were wrong. I can guarantee you that every single one of the clients referred to as “muppets” within Goldman considers themselves to be a sophisticated investor. Mainly because they have Goldman employees phoning them up on a regular basis and flattering them with tales of how sophisticated they are.
Update
Lisa Pollack has more fun with poor Greg here.
