For Goldman Sachs, the real damage of the past two days didn’t come from disgruntled trader Greg Smith’s resignation op-ed. It came from Goldman’s defenders.

Many of the replies said, either explicitly or in effect, of course Goldman rips off its clients if doing so will help it make money. Only the naive would think otherwise. As an editorial in Bloomberg View put it , “It must have been a terrible shock when Smith concluded that Goldman actually was primarily about making money.” (Disclosure: I’m a contributor to Bloomberg View.)

This response, amazingly, was popular within Goldman, too. Ben White, author of Politico’s Morning Money, wrote that “perhaps half” of the employees at 200 West Street — Goldman’s address — sent him the editorial in order to defend their firm.

But Smith never suggested that Goldman should be run as a charity. Rather, he argued something very different. Something that gets to the heart of what Goldman Sachs, and Wall Street, has become.

“Take it in its historical sweep for a moment,” says William Cohan, author of “Money and Power: How Goldman Sachs Came to Rule the World” (and also a Bloomberg View contributor). “For most of the last century, Wall Street — no one knew what it was. It was a bunch of undercapitalized private partnerships. And the way it made money was taking companies public, raising debt for them, raising equity for them, advising them on merger and acquisition deals, and advising them on how to manage their money. There was very little trading. Very little risk for them. That was the business.”

In that business, Cohan says, the profits came from long relationships with firms. You wanted IBM as your client for 100 years. Goldman might have been out to make money, but the particular type of greed was, in the words of former Goldman Sachs director Gus Levy, “long-term greed.” And long-term greed meant treating your clients right.

Today, most of Goldman’s profits come from the trading side — which is also, incidentally, where Smith worked. “If you need IBM to be your client forever, you don’t call them a muppet,” Cohan says. “If it’s some guy on the other side of a quick trade? You don’t need him forever.”

To be sure, the trading side of a bank is also able to offer service to the firm’s long-term clients. If IBM wants to trade a complex derivative quickly, Goldman’s traders can jump on the other side of that bet and then either remain on the other side or sell the derivative to someone else. That’s good for IBM.

But it also exposes Goldman to vastly more risk and very different incentives. Sometimes, the firm is left holding risks no one would want, and the job of its traders is to sell those risks to someone else who doesn’t know enough to know they shouldn’t want them. That’s the sort of behavior Smith was referring to when he complained of having to persuade clients “to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit.”

He also implied that the ethos of the trading side is infecting the advisory side. There’s pressure, he wrote, to “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. “

Much in Smith’s op-ed defies belief. It’s hard to accept the idea that Goldman’s culture is more “toxic” today than it was in 2005, when it was involved in inflating a housing bubble that would help crash the global economy, or in 2007 and 2008, when it began desperately offloading housing-related assets to investors who hadn’t realized that the market was going to crash. If there was a culture change, Cohan notes, it likely came when Goldman went public a decade ago, not after a financial crisis that almost wiped the firm out.

That Smith chose 2012 to write his cri de coeur, as opposed to 2006, suggests that personal or professional reasons might have motivated his change of heart. And, at any rate, in a firm with 12,000 vice presidents, one vice president’s frustrations should not be taken as obviously representative of either his colleagues or his company.

But the response of many of Goldman’s defenders confirmed the very trend Smith was lamenting: a change from long-term greed, which aligned Goldman’s interests with those of its clients and arguably with those of the broader market, to short-term greed, which is not quite so benign for your clients or for the broader market.

If the best that can be said of Goldman today is that it’s well known that the firm will do absolutely anything to make a quick buck, then the problem with Smith’s op-ed might be that it’s late, but not that it’s wrong.

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