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Whether you’re a Facebooker, Twitter is your information on-ramp of choice, or you still hold stubbornly to good old-fashioned newsprint, chances are, on March 14 you heard about “The Goldman Resignation.” Greg Smith’s stunningly public resignation through a New York Times op-ed certainly was one for the record books. Indeed, Smith was probably still bubble-wrapping diplomas while late night talk show hosts were busily spinning the story into their evening round-up. What was it about The Goldman Resignation that so captivated the nation, even the world?
For one thing, payback. We like to believe that what comes around goes around. Whether or not we fully understand the nuances of collateralized debt obligations or the connection between the tanking of the housing market and mortgage-backed securities, many Americans believe that big banks have done some bad things without too much of a hit to the executive bonus pool. Greg Smith, pedigree and position notwithstanding, is a little guy. And he’s a little guy who spanked Goliath. If there was any doubt about the power of Smith’s message, consider Goldman’s $2.15 billion stock dive following his very public message about the bank’s loss of “moral fiber.”
Perhaps more important, change is in the air. While important regulatory developments like Dodd-Frank and similar government initiatives launched overseas foretell a new kind of commercial engagement, The Goldman Resignation made it personal. People, everyday people, are speaking out against greed and standing up for corporate integrity. This matters. While Smith clearly stated that he had no knowledge of illegal conduct at Goldman, it is precisely the profits-over-people environment that allows misconduct to take root and thrive. When client interests are “sidelined,” when clients are transformed from humans to “muppets,” it’s a slippery slope – and only a matter of time – before big, unethical or illegal conduct rears its ugly head.
In a 2007 survey, the Compliance and Ethics Leadership Council determined that, of 45 variables tested, the fear of speaking up is the strongest indicator of misconduct. The study found that “companies in which employees are uncomfortable speaking up or fear retaliation have significantly elevated levels of misconduct.” Hopefully, Greg Smith’s resignation can embolden more employees to take a stand. And, in those instances where an employee has knowledge of actual violations of the law, initiatives like the new SEC Whistleblower Program provide individuals with real protections from retaliation and significant financial incentives to tell the truth.
Let’s hope Greg Smith is a harbinger for a new era on Wall Street, an environment characterized by transparency and decency, where doing the right thing is the only thing. Good things happen when individuals commit to integrity. Clients prosper. Shareholders prosper. The public thrives.