by Steve Adubato, PhD

When will the folks on Wall Street understand that how they communicate in public has everything to do with their reputation? The most recent and glaring example of Wall Streeters bumbling their public communication involves Goldman Sachs’ CEO Lloyd Blankfein and his colleagues.

It’s no secret that Goldman Sachs has taken a huge hit to its reputation and brand. The firm has been sued by the SEC for fraud saying that it “misled investors in a mortgage-linked investment known as Abacus.” Blankfein and friends were called before Congress to testify for nearly 10 hours in front of an angry and frustrated Senate Permanent Subcommittee on Investigations to explain how the firm was out in public selling a product that internal e-mails described as “sh--ty” deals.

We are talking about highly questionable mortgage investments that shafted investors out of millions of dollars while Goldman Sachs was making money on the same deals because they were doing the exact opposite of what they were advising their clients.

CEO Blankfein was pressed by Senator Carl Levin (D-Michigan) when he said he was “not troubled” that Goldman Sachs was out pushing potentially risky and dangerous securities while not telling clients that his firm was making side deals because they were pretty sure those securities were going to go into the tank.

Incredulously, Blankfein said; “I don’t believe there’s a disclosure obligation”. Think about it. Blankfein was saying that there was no legal obligation to communicate to clients that the firm was doing one thing while telling their clients to do another. There was no legal obligation to say that they were betting against the advice they gave to clients. What does that say about the integrity of Goldman Sachs’ communication?

When pressed about whether Goldman Sachs regretted any of this, Daniel Sparks, who formerly headed Goldman’s mortgage unit, said this before the subcommittee; “Regret to me means something that you feel like you did wrong, and I don't have that.” And raising his voice, Senator Levin responded; “You’ve got no regrets? You ought to have plenty of regrets.”

Further, Senator Levin added; “Your own employees believed they (the investments) are crap, a piece of junk, or a sh--ty deal.” Later, a 31-year-old trader at Goldman Sachs and Stanford-trained whiz kid named Fabrice Tourre said this about his writing the e-mails describing the mortgage investments in such a derogatory fashion; “I regret these e-mails. They reflect very bad on the firm and on myself. And, um, you know - I wish I hadn't sent those.” Consider that Tourre was saying he regretted writing the e-mails, not the fact that his firm was actually pushing the bad investments.

Goldman’s CEO Blankfein and his colleagues’ communication performance before the Senate subcommittee was an abomination. Blankfein would later say; “We have a lot to improve in our communication with Main Street and we are committed to doing it.” Talk about an understatement.

When corporate executives lack credibility in their public communication, both they and the organization they represent take a massive hit. Reputations are destroyed. Confidence is lost. It continues to amaze me that people who get paid so much and have such significant professional responsibilities continue to communicate in such a poor fashion. Goldman Sachs is just the latest example of this sad and pathetic fact of professional life.