COMMENT: There are issues at the top at Goldman Sachs

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David Solomon Goldman Sachs

As a proud alumnus of Goldman Sachs, I am angered by the 1MDB scandal. I am even more angered by the inadequate response from senior leadership.

Leadership, led by CEO David Solomon, continues to exhibit an complete inability to organize a coherent and effective response to media scrutiny. Today, I therefore see troubling signs that Goldman Sachs has learned very little from the financial crisis.

After making comment about doing "God's Work" in 2009, Lloyd Blankfein’s performance at a 2010 Congressional Hearing did extensive damage to the firm's reputation. Lloyd was combative, focused on arguing the minutiae of market making, and refused to take any responsibility for the the financial crisis. He came off arrogant and solidified Goldman's position at the most hated company on Wall Street.

Eight years later, David Solomon sent a widely publicized voicemail to his employees, evading any responsibility for 1MDB. He pinned the blame on rogue employees and conveniently seemed to forget that 1MDB happened under his watch in the very division he managed.

It's since been reported that despite some objections from compliance, 1MDB passed through supposedly robust safeguards and checks, was ultimately was approved by a committee chaired by the firm's current CFO Stephen Scherr.

While the employees driving 1MDB may have been 'rogue', the approval process certainly was not. The Wall Street Journal reported that Goldman decided to proceed doing business with 1MDB despite suspiciously high fees and despite other firms passing because they suspected fraud.

Wall Street gives advice on corporate governance to other sectors but rarely heeds it. Imagine for a moment, if 1MDB happened in any other sector. If the actions of a business led to billions of dollars of fines, criminal investigations, and civil investigations across multiple continents, what would happen to the executive who ran that business? What would happen to people who approved those deals?

Goldman Sachs stock is down roughly 30% since the scandal, wiping out $30bn of shareholder value in the process.  Yet, Gregg Lemkau, the co-head of Investment banking, was on CNBC this week to saying that Goldman Sachs employees don't focus on the stock price and joked the flip-side is bankers will now get cheaper stock at bonus time. Both David and Gregg's actions remind me of the arrogant and tone deaf comments that Lloyd made a decade ago.

Mr Lemkau, $30bn of wealth has been wiped out from pensions, endowments and individuals that own your stock. They don’t get equity awards on the cheap. They don’t have millions of dollars of savings like you do.

Time and again, Goldman executives refuse to hold themselves accountable and make comments that show they still 'don't get it'

The culture must change. Change comes from the top. Senior management needs to change.

This piece was written by anonymous Goldman Sachs alumnus and reflects his subjective opinions, which are not those of eFinancialCareers

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