Ex-SEC Chairman Defends Goldman: 'Nobody Really Puts Customers First'

That old adage that the customer is always right might be true. Whether it matters is up for debate.

“Nobody really puts customers first,” Arthur Levitt, the former chairman of the Securities and Exchange Commission and now a policy advisor for Goldman Sachs, told Bloomberg TV Thursday.

“Business is a tension between sellers and buyers, and that tension always exists,” he added.

His remarks come as Goldman faces increased public scrutiny over its treatment of clients. Greg Smith, a former employee that resigned from the firm via an op-ed in The New York Times earlier this month, criticized Goldman, saying that executives often refer to clients as "muppets" and value profit above all else -- including serving customers.

But Levitt isn't the only prominent name to come in defense of Goldman's culture. New York Mayor Michael Bloomberg called Smith's op-ed “ridiculous,” suggesting that the company’s priority has always been to make money.

Partly in response to negative public perception, Wall Street firms have recently been shifting their focus from financial performance to customer service, according to a recent report.

Levitt said he disagrees with the new approach, telling Bloomberg TV that Goldman Sachs should focus on its “competence,” rather than prioritizing customers. “Let’s not create a fellowship between buyers and sellers which will march into the sunset,” he said during the interview.

Comments

[You Play]

12:34 PM on 04/02/2012

Was In Lubbock at the Holiday Inn.This customer was put first. Thanks

[Joseph LeCompte]

11:27 PM on 03/30/2012

It was fraud. Controls and scouting fraud that crushed the economy. Be as greedy as you want but illegal activity and fraud is a crime. Those on wall street have tried to confuse the issue. They are criminals because of fraud,not because of greed.

[Azetoth]

04:39 PM on 03/30/2012

Hate to sound racist, but why are we defending Israel when Israeli descendants would rather see the country that fills their coffers broke and poor?

[Matthias9119]

03:32 PM on 03/30/2012

"Nobody Really Puts Customers First" is an awfully shortsighted view.

While it's true that any business with a profit margin is in some way at odds with its customers (I mean, they're technically 'overcharging' the customers), most people recognize that services and products cost money, and businesses need to be profitable to exist.

But when you start prioritizing profit over customer service, or just screwing your customers because you can... that's not sustainable. Unless you have some kind of monopoly on the service you're providing, eventually you'll lose all your customers and then you won't have any profits. The long view requires that you keep (most of) your customers (reasonably) happy.

As the saying goes among poker players, which can loosely be thought of as a service economy (bad players trade money for entertainment value and/or experience to become better): you can shear a sheep many times, but only skin him once.

[KeyopsBack]

11:40 AM on 03/30/2012

Let's not put any money into Goldman hands the top priority first.

[Liberal2009]

10:11 AM on 03/30/2012

And thus the birth pangs of the fascist state complete. Bush brought the once great nation to its knees, and Romney will sever its head, starting a new era of tyranny.

[Panda Bear]

08:41 AM on 03/30/2012

There is making money and there is being greedy...Goldman and others are the latter. When what you are doing is borderline illegal and/or unethical, just to make a few dollars more, it times for the people at the top to stop it and do thr right thing by their customers.

[Azetoth]

04:41 PM on 03/30/2012

The best way to stop them is to eliminate the need for their services or use their competitors instead.

[mutton]

08:38 AM on 03/30/2012

...and this is why we need strong, powerful governmental regulation. It's the only possible way of protecting consumers.

[bintampa]

08:34 AM on 03/30/2012

As I have said before. Republican motto "Hurray for me and screw you!"

[rcampbell]

08:29 AM on 03/30/2012

In the mid-90's my partners and I took a company public. We were required to sign a document affirming our understanding that our first priority was to return the maximum profit for the benefit of the investors. This seems a reasonable demand of those from whom you're asking to invest money while not actually operating the business. However, one should make no mistake in thinking that the quality of company's product or service, its customers, employees or suppliers are the first priority.

This is a big reason I support unions. The owners/investors' interests will be represented as the firms' top concern which means employees must represent their own interests in their employment. Since wages and benefits are almost always a company's biggest expense, those whose 1st priority will natually look there first to increase that profitability at the expense of workers. This isn't because they're bad people, they have a different agenda than workers and unless those workers are united, they will be lambs sacrificed for profits and bonusses.

[PathofTotality]

08:10 AM on 03/30/2012

I would be upset if I were surprised or shocked.

[Gonzo333]

07:55 AM on 03/30/2012

Astounding! The fascist so called free mark philosophy in all it's gory. Time to completely divest from the Wall Street casino.

[Puck68]

05:39 AM on 03/30/2012

Every company is initially created to fill a real or perceived need. The success strategies for most companies, therefore, are to keep the customers it has and get new ones. "Success," whether that be money, market share, members, whatever, are lagging indicators of the first two strategies. On Wall Street, obviously, those initial drivers of why the companies were created have vanished, replaced by nothing more than self-indulgent greed. Without customers, companies have no reason -- nor should they have a right -- to exist at all.

[walt1944]

08:06 AM on 03/30/2012

Back in the 1950's my father owned a neighborhood grocery store. Since the store was family owned, we ALL had to work in the place, putting long hours, sacrificing our weekends, and having very little time off to spend as a family. However, we all realized that the place was OUR "bread and butter" and to make it continue operating, we relied on CUSTOMERS to come in the door and spend money.

My father's business ethic was simple: Keep you customer base happy and be FAIR to all your customers and the business survives. Tick off just ONE customer and you have ticked off 10 or more POTENTIAL customers as well.

Today, you don't hear that ethic anymore. It's keep the STOCKHOLDER'S happy, and to H-E-L-L with your customers.

[rfstevens]

02:08 AM on 03/30/2012

Wow! Now here are some folks that can really identify with Romney. They have no clue and don't care to have one.

[walt1944]

08:16 AM on 03/30/2012

When's the last time you met a businessman who had a clue about ANYTHING except making a PROFIT?????

[AlienC]

02:01 AM on 03/30/2012

Thus spaketh the 1%.