look we don't one thing we don't know about greg smith is the circumstances under which he left or why he left this is obviously extremely rare i can't think of another instance in goldman sachs history where this is happened. you know usually they get people who leave the firm to sign non disparagement agreements or to sign confidentiality agreements usually that's how they get people to stay in the fold stay under the tent obviously that did not happen this time we don't know why we don't know what greg smith was thinking this is not a good day for goldman sachs because frankly they thought this kind of sturm and drang about their behavior was very much two thousand and ten two thousand and eleven news they were hoping to get this behind them and so this dredge that up again but this has been going on of course the search for a long long time and it didn't change unfortunately after the financial crisis ok and so then i think we have to get to some of the points that he makes because it seems like greg smith is still optimistic that goldman sachs can change if it wants to any thinks

interests in sort of its clients so i'm not sure word rock greg smith crawled out from under today to write this but this has been going on a long time ago in a sense well so in that sense i did you question his motives that all right i've seen some people asking if he could have done this before he worked at a company or an investment firm like alderman sachs and probably made a whole lot of money doing it for the last twelve years you know as a kind of a cop out to leave now. look we don't one thing we don't know about greg smith is the circumstances under which he left or why he left this is obviously extremely rare i can't think of another instance in goldman sachs history where this is happened. you know usually they get people who leave the firm to sign nondisclosure agreements or to sign confidentiality agreements usually that's how they get people to stay in the fold stay under the tent obviously that did not happen this time we don't know why we don't know what greg smith was thinking this is not a good day for goldman sachs because frankly they thought this kind of sturm and

has the culture changed as greg smith wrote about in the oped piece today? >> well, you raise an interesting point n. my book, i pointed out how goldman has strong values. like putteding the client first, and hiring brilliant people who are good team players. they have four team values they feature prom nenltly on their website. and the big thing when lloyd blankfine became ceo, during that time the stock price fell 20% interestingly enough. he is a trader. and he bring that is trading mentality to the firm. the trading mentality is very, very short term. it doesn't stress having relationships with ceos. if, on the other hand, before 2006, there was a better balance between trading and investment banking and investment banking involves establishing relationships with ceos over the long term where they're kind of behavior that goldman has demonstrated, most prominently in 2007 would not have been available. soox*uds we have a half minute left. i topt ask you this. what's the fallout from this, from the point of view that investors are selling off the stock, a

and whatever you may say about greg smith, his views are not unique.ople have been saying privately for years, he just said it publicly. i heard it near goldman bankers and clients particularly at hedge funds for years. >> there's a history, public history, the mortgage package they put together, lousy paper, they sold it to clients, what they wound up paying $500 million fine from the s.e.c. and you know, the fact that blankfein had to issue that statement today, tell me that this greg smith drew blood. >> of course he did. this couldn't come at a worse time for goldman sachs not only on the heels of the questions of their practices during the mortgage boom that you mentioned, but right on the heels about criticism of the multiple conflict goals that goldman played in the recent kinder morgan el paso deal. it's opening a wound that doesn't even have a scab on it yet. >> bethany maclaine, just from your reporting or maybe your intuition, do you think that lloyd blankfein is on his way out? and i want to add that greg smith fingered cohn. are those guys

greg smith is vice president of goldman sachs.s decided to leave the company and he has written a devastating letter as to why. he said that the environment there was toxic and destructive. that there was a decline in the firm's moral fiber. and that morally bankrupt people work there. god, those are harsh words. what was he so upset about? he said look, we used to take care of our clients. that was our job. but we no longer do that. apparently they call the clients muppets as in ha, ha, we can manipulate them. and they would rip their eyeballs out and the whole point was getting paid. they explained what they did with clients. will people push the very well and pitch lucrative and complicated products, in other words, who gives a damn about the clients. let's screw them over so we can make more money. he said it wasn't always that way. goldman has responded. they have sent a letter out to their employees, in a company our size it's not shocking that some people feel disgruntled. well, of course, disgruntled employee. we're terrif

everyone why he's leaving goldman in a new york times editorial by now everyone probably knows who greg smith is it really does tell you what he says is the formula for being a leader at goldman so we can read this execute on the firm's axis which is goldman speak for persuading your clients to invest into stocks or other products that we're trying to get rid of because they are not seen as having a lot of potential profit or be elephants which basically just means to trade whatever will bring the biggest profit to goldman or see find yourself sitting in a seat or your job is to trade any illiquid opaque product with a three letter acronym yeah we know those m.b.a.'s c.d.'s c.d.o. that kind of thing but we just want to say wow how far we have come since the days after the financial crisis when goldman was being accused of knowingly selling clients investments they knew were bad and profiting like in a temporal transactions to twenty two is the date of this e-mail. that timberwolf was one q how much of that deal did you sell to your clients after june twenty to two thousand and seven. mr chair

down josh welcome to the kaiser report pozo max about the issue of brown it seems like you hired greg smith to go out there and write that letter to the new york times to help promote your book is that true yes it's very true i owe him a basket of flowers and fruits. all right speaking of grapes just brown people were shocked shocked that goldman sachs refers to his clients as the muppets despite all the wealth destruction of the past decade the population still believes that wall street is there to help them make money of course in your book you explain why that's not the case but why what about this great smith letter do you think it's a much ado about nothing or is it going to have legs as they say in the in the in show business you know i was i was actually pretty quick hold of of his of his op ed and people are somewhat confused about what the difference is between me and him because i've just written this kind of tell all wall street talk so the major difference is that greg is delusional he seems to think that over the last five years something has changed so i think i think greg is

all right figure greg smith josh brown people were shocked shocked that goldman sachs refers to its clients as the muppets despite all the wealth destruction of the past decade the population still believes that wall street is there to help them make money of course in your book you explain why that's not the case but why what about this great smith letter do you think it's much ado about nothing or is it going to have legs as they say in the in the show business you know i was i was actually pretty critical of of his of his op ed and people are somewhat confused about what the difference is between me and him because i've just written this kind of tell all wall street book so the major difference is that greg is delusional he seems to think that over the last five years something has changed so i think i think greg is is kind of full of themself in thinking that everything was fine for twelve years and then all of a sudden something changed it's always been this way if you do the research in the history of wall street and main street relationships which is what my book covers there's never

goldman sachs your money and you spiking the punch bowl as it's called that's exactly right the greg smith letter got a little too close to goldman sachs federal reserve bank so they're going to flood the room with a lot of cash which will make a lot of people some short term gains and you know as we've talked about on the show before if they can i. p.o. initial public offering like facebook for example goldman sachs takes of huge position for fifty billion dollars illegally by the way that's an unknown contestant now they going to take it public for a hundred billion plus so all the lawsuits that are going to result from greg smith they'll say look don't sue us we'll put in the guaranteed winner in your account numbers on game day one if you drop your charges that's when my peels all about having worked on wall street i myself i've done that many times hello mr jones don't sue us here paine webber or oppenheimer or shearson or lehman because who put this hot i.p.o. in your account and you make instant profits so drop your lawsuit ok how pins every single day that's the law as written by b

to take it public for one hundred billion plus so all the lawsuits that are going to result from greg smith they'll say look don't sue us we'll put in a guaranteed winner in your account one person game day one if you drop your charges that's where my pills all about having worked on wall street i myself have done that many times hello mr jones don't sue us here paine webber oppenheimer or shuras and or lehman because we'll put this hot i.p.o. in your kill and you make instant profits so drop your lawsuit ok how planes every single day that's the law as written by brokers with hot i.p.o. shares so you mentioned capital allocation so we see here the age of the shadow bank run this is from the new york times tyler cowen he says the bank run is back and modern bank run means a rush to withdraw from money market funds the disappearance of reliable collateral for overnight loans between banks with the sudden pulling of short term credit to a troubled financial institution but these new versions are in some ways still similar to the old both reflect the desire to pull money out of an endeavor and

glow in the west called first greg smith now a congressional budget office with a lower has come out alleging she was fired for not accepting the wall street party line pressured not to be pessimistic about banking and housing outlooks it's certain to feel a little like this. is a story. that's true since. we'll see where it goes in the twenty five billion dollar mortgage settlement was dates and bank shows whistleblowing can actually payoff we'll talk about it but that brings me to is there just no winning against the too big to fail banks when one judge jed rakoff rejected the f.t.c. need two hundred eighty five million dollars settlement with citi group it was over toxic mortgage debt well it was because citi group wasn't forced to admit liability that he rejected that will now a federal appeals court has stopped just short of rejecting his rejection thing he overstepped his authority come on what is it gonna take to these them admission of guilt and speaking. simply do not know where the money is or why the occurrence is not going to work and. remember that while the end of globa

so a day later we are still seeing the fallout from the greg smith off that everyone is talking about goldman sachs of course was what that was about they saw more than two billion dollars in the market value wiped out yesterday goldman also j.p. morgan reportedly fired off internal memos to employees post new york times piece and according to bloomberg an employee of bank of america's merrill lynch division said his team was told not to send copies of the articles to clients i don't know why that would matter i mean anyone can google but funny i wonder if they were told about mt to evey's new article in rolling stone which also came out yesterday about bank of america called too crooked to fail now failing marks from the press aside most of the big banks escaped them from the federal reserve this week fifteen of the nineteen biggest banks passed the fed stress test but neither the fed nor the banks appear to make the grade with our next guest christopher whalen senior managing director of tension capital partners author of inflated how money and debt built the american dream which yo

greg smith said that he was quitting goldman's after more than a decade at the bank. he accused the firm of betraying its clients and fostering "a toxic and destructive culture." very, very strong words. a lot of it aimed at lloyd blankfein as well, nina. >> very strong words and also very publicly voiced, andrew. goldman sachs, as you imagine, fired back with a memo of its own throughout the course of the day, but as mary snow reports now, greg smith's dramatic exit could heighten public disgust at wall street just at a time when the u.s. economy is still rather weak, and many ordinary people face bleak economic prospects. >> reporter: goldman sachs is known for being shrouded in secrecy, with rare public glimpses into the firm at congressional hearings like this one on the financial crisis. and that's why it's so unusual for a goldman sachs insider to resign from the firm through a blistery "the new york times" op ed piece. greg smith, an executive director, quit after 12 years, writing "the environment now is as toxic and destructive as i've ever seen it." he write

as for greg smith, he's not going to be working on wall street anytime soon. as one observer said today, he might as well go into the witness protection program. >> i'm trying to decide how we feel about him. he worked for for a decade. made a lot of money there. >> reporter: he probably did. and we don't know whether he quit genuinely because of these moral concerns. or if he was forced out and this is his angry parting shot on the way out the door. >> but it clearly stung. got a reaction. >> reporter: it did. >> thank you, dan. >>> and from one whistle-blower to another, we are getting action tonight. and the subject, pink slime. one week ago, jim avila brought us that report. a beef insider speaking out about something commonly known as pink slime. a filler used in 70% of all ground beef in this country, including the beef sold to public schools. jim's story prompted a public outcry. the usda heard it. and tomorrow, they will announce that starting this fall, schools will be given a choice. to buy the less-expensive hamburger patties that contain pink slime

of fame much better treatment you could say than the real life was goldman sachs according to greg smith's op ed and goldman alum who have come forward about the firm's muffet customers will give you the round up of them as a new round of staff cuts it goldman are god's latest work let's get to today's capital account. as you heard me say federal reserve chairman ben bernanke he began his college lecture series today he spoke to undergraduate students at george washington university right here in d.c. becoming the first chairman ever to help teach a college course now eighty students apply wrote as phase really wanted to be a part of this to become indoctrinated and why the federal reserve is important i would argue let's highlight a few of his powerpoint lessons since we listened and watched his lecture attentively so here's where he is talking about the fed being the lender of last resort he says the qualities there are that they lend freely against good assets at a penalty rate to discourage excessive use honey ok so that's what he told those students that's funny though because we thou

banks and the actions we have seen this week a lot of whistleblowers coming out saying that i mean greg smith came out obviously in an op ed that just made huge waves now we have this c.d.o. whistleblower coming out saying she was essentially asked to do the bidding of wall street and then dismissed when she did not you also have a backlash coming out against them and with greg smith the thing i've heard repeatedly from people on wall street in the enterprise in the business press is they'll never work on wall street again you know forget it you don't you don't talk out of you don't speak out about it is there a code of silence oh absolutely this economy look at what's happening in the some of the situation who's fighting it's individuals you know we're the major institutions in our industry or the final battle where frankly we're in a battle for our lives and there's been a cone of silence in our industry and there's been a sweep it under the right attitude and you know i think that's the you know the whole thing about too big to fail is some of the arguments you know we can't attack them be

law st and dismissed when she did not you also have a backlash coming out against that and with greg smith the thing i've heard repeatedly from people on wall street in the end oppressed in the business press is it will never work again you know forget it you don't you don't talk out of you don't speak out about it is there a code of silence absolutely there's a cone of silence look at what's happening in the some of the situation who's fighting it's individuals you know we're the major institutions in our industry or the final battle or frankly we're in a battle for our lives and there's been a cone of silence in our industry and there's been a sweep under the rug attitude and you know i think that's you know the whole thing about too big to fail is some of the arguments you know we can't attack them because they're so critical to our economy well you know one headed for debt crisis let's just face it and to be to fail is entirely correlated to economic prosperity that's how wall street for the most part we need to take a look at it and you know when too big to fail fails who's going to b

technology says, i salute you, greg smith.ade a stand for morality and this took courage and strength. there was one criticizing him saying after this whiney greg smith won't be able to get a job in a 4-gr hot spot. >> it polarizes people. i don't think anyone goes on wall street to not make a lot of money. >> right. >> the second thing is, the culture on wall street has changed not only at goldman sachs, but at the banks in general. which some people can trace back to the repeal of glass spiegel. essentially when they did that, trading became a much bigger business. and the clients are comfortable with that. some of them are. they know that there's a chance that they could be taken, i suppose. >> when i was reading this this morning and tweeted it out as the new reality show, i quit goldman sachs, i think that -- >> ooh, that's good. >> i was thinking, you know, this also, you know, alleging that they're going out and taking advantage of their customers. this is supposedly the institutional level. you go back to the 1940s, th

greg smith called the company's culture toxic and destructive in his much-talked about letter.ldman for not putting clients first. he also offered these solutions. weed out the morally bankrupt people, no matter how much money they make for the firm and get the culture right again so peep ewant to work there for the right reasons. people who care only about making money will not sustain this firm or the trust of its clients for much longer. christine romans, goldman is a company that's seemingly never really cared that much about pr, at least in recent years. is there any expectation this high-profile resignation will lead to any change at the company or more importantly a loss of any of its clients. >> a guy nobody even heard of has done more to hit the reputation of goldman sachs than high-profile congressional hearings. >> but has it? that's my question. >> it really has because it came from inside. it came from somebody nobody expected. it went off like a bomb inside goldman headquarters. here's a guy that has a resume who looks pretty sterling. he used to run the interns.

greg smith quit in a very big way by writing this opp ed. pretty explosive resignation in the new york times. not everyone can get away with that but he can because he's a big cheese, right? >> exactly. and you have the platform that legitimatizes it. the fleeting satisfaction that you have is not worth the price in terms of your long-term career. >> but a lot of people do dream about going out with a big bang. if you are going to go out, whether it's voluntary or not, maybe the best that you would advise people to do. >> typically, first of all, like the situation with greg smith, if you do have a legitimate complaint, a corporate culture grievance, you might want to air those in the appropriate form. if it's corruption or discrimination, talk to a lawyer before you quit because in certain situations, there are actions to you if it is a legitimate grievance. just keep that in mind. generally speaking, we want to give a two to four weeks' notice and not quit until the moment that you actually quit. don't tell everybody you're quitting before

the former golden vp greg smith calls the company's culture toxic and destructive. fix the giant. weed out the morally bang republican people. christine romans is here, host of "your bottom line." goldman has never really cared about pr, at least in recent years. is there any expectation that this high-profile resignation is going to lead to changes? >> can you believe that a guy we never even heard of a few days ago, it came from size, from somebody nobody expected and went off like a bomb inside goldman headquarters. here's a guy that has a resume pretty sterling. he used to run the interns. he looks like he's on the straight and narrow, and we don't know what sparked this. it doesn't matter what we think, it matters what the clients think. that's always been the most important thing for goldman, what its clients think. >> richard quest is the host of quest means business. i want to read you a quick excerpt from a letter quickly sent to goldman employees from ceo lloyd blankfein. >> we are far from perfect but where the firm has seen a problem we've responded to i

quote: megyn: so who's really, who is this guy, greg smith? and can we believe everything we're reading about him? be stu varney is the anchor of "varney & company" on the fox business network. my first thought is if you write this after a year or a few years after the company -- 12 years? if he hated it so much, what was he doing there for 12 years, stu? >> we're asked to believe that when greg smith joined goldman sachs it was all sweetness and light -- megyn: rainbows and unicorns. >> and all of a sudden those evil bankers came along and turned it into an evil empire. he's a young man, 33 years old, made a half million dollars a year, we are told, and was denied a promotion to managing director. i think he's disgruntled, i think he took part in not a plot, but a way of discrediting goldman sachs, discrediting wall street and putting the whole morality of modern wall street back on the front burner. megyn: which plays into a political narrative that's emerging in our country right now as well. >> i'd say, yes. "the new york times" -- obvious

i don't think greg smith is alleging any illegalities.e's allege agriculture rahal shift at the firm but one that isn't necessarily illegal. >> you talk about how regulators are already in there looking at goldman. you remember when this paulsen mortgage package deal was settled, cost goldman i think $500 million. do you recall the s.e.c. and others said part of the settlement goldman had to change its california and its management. what mr. smith is saying to this letter to the "new york times" is that neither has happened. >> yeah, he certainly is. goldman did this famous internal review and promised to look more carefully at its supposed first business principle of putting its first and that may not have mattered much. >> so there may be some heads rolling, beth ani. >> too soon to tell. i don't know who you have taking lloyd blankfein's play. larry cohn is a continuation of the same. i think that's a real challenge for goldman sachs. >> thank you, bethany. next up on "kudlow," the obama overreach continues. 32 major regulations, a cos

is goldman sachs as bad as greg smith says in this article? >> i'm sorry to say i think there's no doubt that that's the case. i mean, in your lead-in, you got senator levin who's given the justice department several hundred pages of investigative files. believed that they not only deceived their customers but deceived congress by not telling congress the truth. paul volcker, former fed chair, reaches that result. frankly, many people have said about mr. smith's op-ed that this is like telling you that the sun rises in the east in the morning about goldman. and far matter the ethics on wall street in general. but it's still-- as this uproar demonstrates-- it's a terrific sore, not only with people who are involved with wall street but with the american public as ahole w spend trillions bailing these companies out and continues to find out that there is conduct here that really defies common sense and good ethics. and with goldman, it's especially troublesome because goldman had its famous 14 basic principles of business. principle number one w

the new york times ran an op-ed from former gomez long time employee greg smith.e called them morally bankrupt and they care only about clients and not profits. and fox business network charlie gasperino is here and he's going to sort it out for us. charlie, good to have you. >> governor. >> this was a pretty big deal in the financial-- >> oh, yeah, i remember when it hit the wires and the first thing i did was look at this and say, we have to cover this and figure out who greg smith is, and figure out why this man and why the new york times ran this. i mean, i think there's a couple of layers mere. you can find a disgruntled employee and makes a legitimate claim. and every firm, does that stand for the entire firm and ask yourself. why the new york times dignified this. put this on a very prominent place, and this is a big deal. >> mike: it wasn't just a letter to the editor. this was on the op-ed. >> between maureen dowd's column and tom freedman. >> mike: prominent and this is a quote. yet your clients some who are sophisticated and some who aren't, whatever br

i think we're screwed up. >> this letter from greg smith this week shouldn't be surprising. we have seen almost no change in culture since 2008, let's be frank about it, wall street was spared consequences of recklessness by trillions of dollars in bailout. people point to tarp, the $700 billion bailout, but in the end, the taxpayers front electrical yops of dollars for 24 separate programs to save wall street and goldman, sachs, which was circling the drain in the week after lee man. they went from $21 million cash on hand to 57 million. they were saved by a direct infusion of over $100 billion in assistance from the u.s. taxpayers in weeks following the lehman collapse. we have seen almost no correlation between who paid the price for this crisis, american working families, and who drove this crisis, the firms on wall street like goldman that acted in a reckless manner. most troubling to the american people, there's no sense of justice in the wake of this crisis. no feeling that our justice system investigated what brought our economy to its knees. >> stay with us. i want