By now, Greg Smith is an online celebrity and, almost certainly, the loudest resignee in Goldman Sachs Group Inc.'s history.
But if his invective is to be more than an Internet blockbuster, it has to effect lasting change on both Goldman's business and external perception.
The one immediate achievement of Smith's attack on Goldman's culture, published last week in the New York Times, may be to have prolonged Lloyd Blankfein's stay as CEO of Goldman, despite persistent rumors of his departure. No corporate chief would want such a controversy to be his final act.
But what about the substance of Smith's argument—that Goldman's ethos went from customer-first to profit at all costs even when it hurts clients? My unscientific poll of Wall Street and Washington types suggests his efforts are more likely to be ranked alongside piano-playing cats on YouTube than Emile Zola's "J'Accuse" or Jose Canseco's "Juiced."
There are three main audiences for Smith's criticism: Goldman's clients, its rivals and the outside world.
Clients should be unfazed. No hedge-fund manager or corporate chieftain can possibly think that banks are disinterested in the advice they provide or products they sell.
On the Street, Goldman is famous for "being in the flow," jargon for using information gathered from clients to inform its own trading strategies.
That is both legal—provided that the intelligence isn't used to trade ahead of customers—and known to clients, who still seem to value Goldman's ideas, financial muscle and powerful brand. As a hedge-fund manager told me: "The benefits of trading with Goldman outweigh the costs. End of story."
Conflicts do arise—Goldman has had its fair share—and banks should be punished when they stray.
But those who venture on Wall Street should, by now, expect to be treated more like counterparts than clients. Insulting customers and boasting about ripping them off is morally reprehensible, but muppet is as muppet does, to coin a phrase. A muppet is British slang for "idiot."
Which is why Goldman's rivals should resist the urge to profit from its misfortune. A few bankers told me they would forward Smith's op-ed to potential clients, asking: "Why would you hire these guys?"
Bad idea. Banks' practices are aligned by the common goal of maximizing profits and conflicts and bad apples are everywhere.
In finance, the moral high ground is a slippery slope.
James Dimon, CEO of J.P. Morgan Chase & Co., made that clear in a message to his lieutenants last week: "I don't want anyone here to seek advantage from a competitor's alleged issues or hearsay—ever."
Schadenfreude is unbecoming and not just because of altruism. As a Wall Street executive said: "Every firm has 100 Greg Smiths waiting to happen."
Smith's move could indeed prompt others to come forward, deepening the hostility toward an industry that has, justly, shouldered much of the blame for the financial crisis. So far, though, the political backlash has been fairly muted—a reaction that may be driven by Smith's failure to point to specific instances of misbehavior.
Given the vagueness of the allegations, even Goldman's pledge to "examine" them sounds silly. (Imagine the scene: "Hi, I am Goldman's chief inspector. Did you call your clients 'muppets'?")
Instead of "examining" unprovable accusations, Goldman and other banks should ditch the "clients- first" mantra they constantly recite and state clearly what they are about.
Rather than extolling Goldman's "client-driven" culture, as they did in their response to Smith last week, Blankfein and his No. 2 Gary Cohn should have seized the opportunity to explain how the business of finance really works.
Banks aren't charities—they should have said—and they don't just seek to make money for customers. They also have shareholders, employees and executives who want to get paid.
Financial bosses try to do everything legally possible to satisfy all their constituencies, but conflicts are inevitable. Customers and the public should be aware of that.
At present, banks are victims of their own desire to create expectations that they cannot meet in a real world where conflicting interests clash all too often.
Finance is a complicated business but some honesty, and a healthy lowering of expectations, would go a long way.
This story first appeared on WSJ.com.Francesco Guerrera is The Wall Street Journal's Money & Investing editor. Write to him at: firstname.lastname@example.org.