by Susie
That they do anything?
Goldman Sachs Group Inc. (GS)’s directors must investigate a former employee’s allegations about a change in the firm’s culture, Jacki Zehner, who was a partner when she left the company in 2002, wrote on her blog.
Zehner said she doesn’t know Greg Smith, the derivatives salesman whose New York Timesop-ed piece blamed Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn for fostering a “toxic and destructive” environment, causing Smith to quit last week. Zehner, who worked at Goldman Sachs for 14 years, wrote that she’s heard from “many people” in the past few years that the firm is emphasizing profits over character.
“These are very serious accusations from a credible person in my view and I hope it does indeed provide a ‘wake-up’ call to the board of directors,” wrote Zehner, who was the first female trader promoted to partner and is married to a former partner. She is now CEO and president of Women Moving Millions, a non- profit supporting the advancement of women and girls worldwide.
“It is the board that is accountable to shareholders and before they take another paycheck I hope they ask a heck of a lot of questions and get honest answers,” Zehner, 47, wrote in her March 16 commentary.
Derivatives are an insurance policy or hedge against losses on money that is lent out. Derivatives didn’t exist until 1997. Until Clinton allowed the Glass-Ste. Act to be junked they only amounted to a few billion dollars. Between 2000 and 2007, $60 trillion dollars in derivatives were sold to hedge against $6 trillion dollars of debt. Then the collapse of the banks occurred. The question for Goldman Sachs is why 10 times as much money was devoted to derivatives then was required to cover the original debt? Shouldn’t it have been a 1 to 1 proposition? Something seems rotten in Denmark.