The New York Times owns this story; it printed the Greg Smith letter. So for followers of Crisis public relations, two NYT stories over the weekend, two views, one lesson: “Sometimes, the best way to do well really is to do good”.
First, Mayor Bloomberg came out in support of GS. His argument? It was right, and it was his duty to support a company in his city.
According to the Times, the mayor, who ‘has a reputation as a staunch defender of corporate culture, dropped by the investment bank’s Manhattan headquarters on Thursday in an unannounced show of solidarity’… “It’s my job to stand up and support companies that are here in this city that bring us a tax base and that employ our people,”
Then this think-piece (extract below):
The Good, Bad and Ugly of Capitalism - By Joe Nocera; Published: March 16, 2012
On Wednesday, Howard Schultz, the chairman and chief executive of Starbucks, will take the podium at his company’s annual meeting and talk about the importance of morality in business.
Yes, morality. I don’t know that he’ll use that exact word. But there can be little doubt that in recent years, especially, Schultz has been practicing a kind of moral capitalism. Profitability is important, he believes, but so is treating customers, employees and coffee growers fairly. Recently, Schultz has defined Starbucks’s mission even more broadly, creating programs that have nothing at all to do with selling coffee but are aimed at helping the country recover from the Great Recession.
In the speech, Schultz plans to make a direct link between Starbucks’s record profits and this larger societal role the company has embraced. He will make the case that companies that earn the country’s trust will ultimately be rewarded with a higher stock price. “The value of your company is driven by your company’s values,” he plans to say.
I bring up Schultz and Starbucks because this week we saw a different kind of American capitalism on display — the “rip your eyeballs out” capitalism of Goldman Sachs. ………
But there’s a reason Smith’s article has struck such a chord. It is the same reason that Goldman Sachs, despite having come through the financial crisis largely unscathed, has become the target of such astonishing venom, described as a vampire squid and the like. The reason is that the kind of amoral, eat-what-you-kill capitalism that Goldman represents is one that most Americans instinctively find repugnant. It confirms the suspicions many people have that Wall Street has become a place where sleazy practices are the norm, and where generating profits in ways that are detrimental to society is the ticket to a successful career and a multimillion-dollar bonus.
Goldman bundled terrible subprime mortgages that helped bring about the financial crisis. Smelling trouble, it unloaded its worst mortgage bonds by cramming them down the throats of its clients. It secretly allowed a short-seller, John Paulson, to pick some especially toxic mortgage bonds that were bundled and sold to Goldman clients — with Paulson profiting by taking the “short” side of the trade. Just recently, Goldman had to admit that one of its investment bankers had acted as a merger adviser to the El Paso Corporation while holding stock in Kinder Morgan, which was trying to acquire El Paso. It would be hard to imagine a more blatant conflict — yet no one at Goldman bothered to tell El Paso.
These practices may not be illegal, but can you really say they represent the values that we want to see on Wall Street or in our corporations? I can’t.
And Goldman shouldn’t either. What has been amazing is that, despite three years of nonstop criticism — including Congressional hearings and settlements with the government — Goldman has not changed one iota. That is another reason Smith’s article resonated. It confirmed that suspicion as well. Goldman’s response to every controversy these past three years has been to bury them in a blizzard of public relations. And this has been its response to the Smith article, releasing, for instance, a companywide e-mail from Lloyd Blankfein, its chief executive, insisting that Goldman does, too, care about clients. Consistently, Goldman’s attitude has been: This, too, shall pass.
So far, though, it hasn’t. And maybe, just maybe, it won’t. Maybe the time has come for Blankfein to watch what Howard Schultz is doing at Starbucks. Sometimes, the best way to do well really is to do good.
A version of this op-ed appeared in print on March 17, 2012, on page A21 of the New York edition with the headline: The Good, Bad and Ugly Of Capitalism.