Learn more about our policy experts.

Media Contacts

Angela Bradbery, Director of Communications
w. (202) 588-7741
c. (202) 503-6768
abradbery@citizen.org, Twitter

Don Owens, Deputy Director of Communications
w. (202) 588-7767

David Rosen, Press Officer, Regulatory Affairs
w. (202) 588-7742

Luis Castilla, Press Officer, Public Citizen’s Texas office
w. (512) 637-9467

Other Important Links

Press Release Database
Citizen Vox blog
Texas Vox blog
Consumer Law and Policy blog
Energy Vox blog
Eyes on Trade blog

Follow us on Twitter


March 14, 2012 

Goldman Sachs Revelation Underscores Need for Expedited Volcker Rule; Stress Test Results Should Bar Dividends

Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division

 Explosive revelations today from an outgoing Goldman Sachs executive emphasize the need for Wall Street agencies to finalize the Volcker Rule reform, which would prevent many significant conflicts of interest in the financial industry.

In a New York Times op-ed today, Goldman Sachs’ derivatives salesman Greg Smith writes that Goldman’s culture encourages “ripping eyeballs out” of customers who are sometimes labeled as “muppets.”

The testimonial comes on the heels of stress tests results of the nation’s 19 largest financial institutions.  

The Volcker Rule, approved as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, prohibits banks from engaging in trades for their own profits and strictly bars trading that conflicts with customers’ interests. But a barrage of self-serving industry comments have led regulators to signal they will delay implementation beyond the statutory deadline of July 2012. Goldman Sachs submitted two comment letters and met with regulators personally an unprecedented six times. Regulators should put Smith’s candid and brave words on the top of any analysis about how best to reform Wall Street and weigh them when considering the motivations behind Goldman’s official comments and meetings.

Smith’s firsthand account emphasizes that each day of delay prolongs the abuse of Wall Street bankers over their clients. Smith also provides crucial evidence that trading in illiquid markets should have no place in the Volcker Rule’s permission for legitimate market making.   Smith summarizes the Goldman culture about trading these complex instruments: “‘Hunt Elephants.’ In English: get your clients–some of whom are sophisticated, and some of whom aren’t– to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them.”

Meanwhile, the Federal Reserve correctly prevented Bank of America and Citicorp from draining capital through increased dividends following results of the third annual stress test. While the Fed should be commended for providing more detail in its report of the test, the test provides little comfort of a robust financial sector. Four banks failed the test outright. Citicorp, the nation’s third-largest bank, was one of them. This failure underscores the fragility of the financial system. Should the nation’s third-largest bank be rendered insolvent by a sharp drop in economic fortunes, reverberations throughout the financial system could cascade into widespread calamity.

JPMorgan Chase and Bank of America, the nation’s first- and second-largest banks, barely exceeded minimum capital standards in the test– another chilling result.

To prevent another taxpayer bailout, banks should build substantially more capital. Dividends paid now should not become advances on another taxpayer bailout. And regulators should put into place a strong Volcker Rule to prevent banks from putting self-serving interests above the real economy.


Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org

Copyright © 2017 Public Citizen. Some rights reserved. Non-commercial use of text and images in which Public Citizen holds the copyright is permitted, with attribution, under the terms and conditions of a Creative Commons License. This Web site is shared by Public Citizen Inc. and Public Citizen Foundation. Learn More about the distinction between these two components of Public Citizen.

Public Citizen, Inc. and Public Citizen Foundation


You can support the fight for greater government and corporate accountability through a donation to either Public Citizen, Inc., or Public Citizen Foundation, Inc.

Public Citizen lobbies Congress and federal agencies to advance Public Citizen’s mission of advancing government and corporate accountability. When you make a contribution to Public Citizen, you become a member of Public Citizen, showing your support and entitling you to benefits such as Public Citizen News. Contributions to Public Citizen are not tax-deductible.

Public Citizen Foundation focuses on research, public education, and litigation in support of our mission. By law, the Foundation can engage in only very limited lobbying. Contributions to Public Citizen Foundation are tax-deductible.