A BLISTERING attack on Goldman Sachs by one of its own bankers has hit a raw nerve inside the firm seen to symbolise the excesses of Wall Street.
It has stoked bitter memories of the financial crisis among some former clients.
Greg Smith, a London-based former Goldman executive, took aim at the "morally bankrupt" culture there.
The searing attack, through a resignation letter, which ran in The New York Times, came just two years after Goldman was damaged by another of its own bankers, Fabrice Tourre, who described creating "Frankenstein" products that badly burnt clients.
Mr Smith said the Tourre incident had not taught the firm humility or integrity.
He wrote: "Over the last 12 months I have seen five different managing directors refer to their own clients as 'muppets', sometimes over internal email." Mr Smith said the fast way to a promotion involved persuading clients to invest in stocks or other products "that we are trying to get rid of because they are not seen as having a lot of potential profit".
"Today, if you make enough money for the firm (and are not currently an ax [sic] murderer) you will be promoted into a position of influence," he wrote.
The culture of Goldman today was all about raking in the bucks from clients, he said, and he saw "virtually no trace of the culture that made me love working for this firm" for many years.
Goldman rebutted Mr Smith's comments, with its chief executive, Lloyd Blankfein, and president Gary Cohn, insisting the firm was focused on the client.
"We disagree with the views expressed, which we don't think reflect the way we run our business," the two said in a memo to the firm's 35,000 staff.
"In our view, we will only be successful if our clients are successful. This fundamental truth lies at the heart of how we conduct ourselves." Some inside the bank claimed Mr Smith's sincerity was not all that pure, amid suggestions the former trader was disgruntled after not getting a promotion.
There were also reports he had been passed over for a bonus.
Mr Smith's clients at Goldman are said to have included two of the world's largest hedge funds and three major sovereign wealth funds in the Middle East and Asia. Mr Smith's central claim in his resignation letter that Goldman pursued its own profit at the expense of its customers is common among the bank's critics.
Former Goldman Sachs customers are likely to take close interest in Mr Smith's comments.
One, the Australian hedge fund Basis Capital, last year filed a suit worth $US1 billion ($937 million) against Goldman Sachs in a New York court.
One of the funds operated by Basis claims it was misled by the Wall Street giant, which allegedly sold it a toxic package of subprime mortgages that collapsed.
In its filing, a fund managed by Basis described a scheme by Goldman to sell a batch of dubious securities from early 2007 linked to US subprime mortgages.
It also claimed the bank was making large bets against the securities at the same time it was reassuring clients they were sound.
"The matter is still very much alive," a spokesman for Basis said yesterday.
Goldman Sachs has said it would vigorously defend the Basis claim.