Why it's hard to get worked up over Goldman confessional

Because for all the harumphing we've heard these past few days following Greg Smith's very public resignation, Goldman clients don't seem to care about being ridiculed by bank employees (and let's face it, what employee doesn't ridicule his clients in the off hours?) Just so long as they deliver the goods - and you might have noticed how the stock is bouncing back from a mid-week tumble. A good dose of reality comes from former Wall Street insider William Cohan, who has written three books on the financial industry. He takes Smith's observations seriously, but only to a point. Full interview with Henry Blodget is above, but here's a snippet:

Selling what he was selling - derivatives- is one of the most sophisticated products that Wall Street engages in. There are no idiots in that game. You go to Goldman to pawn off some risk, Goldman arranges it, everybody knows what they're doing. Sometimes it works out, sometimes it doesn't. This is not a charitable organization.

One of Smith's big arguments is that clients will stop doing business with you if they don't altogether trust you - and it's a valid point. But in the context of Wall Street, trust can be a slippery proposition. Again, a lot just comes down to how much money you're making or losing. From NY magazine's Jessica Pressler:

"I have traded with Goldman for 25 years and have the utmost respect for them," one Goldman client told me. This was a high-net-worth investor, the kind the firm might, according to Smith, describe as an "Elephant." He added, "Lloyd Blankfein is about 50 times smarter than other CEOs." At the close of the market on the day after Smith's resignation, Goldman shares were already near their pre-Smith levels. The Elephant wrote a note to his account rep at the firm. "Keep up the good work," he said.

Clients have not stopped doing business with Goldman - nor will they - because performance inevitably trumps morality. Goldman has a long history of deceiving customers, going back to at least 1929 when it pushed inflated shares of a company about to go bust. John Kenneth Galbraith called it "corporate thimblerigging" and the Goldman people were apparently quite good at it. From Pressler:

More recent accusations of chicanery have bounced off the firm like spitballs off a warship. A Goldmanite turned hedge-fund manager once explained to me the mentality of the firm's clients in these terms: Yes, dealing with Goldman is distasteful, but it's too lucrative to give up; sure, they'd try to screw you, but if you're smart and they respect you, the payoff could be huge.