Public interest advocates in Washington want to turn former Goldman Sachs (GS) executive Greg Smith into their poster child for tough new rules for Wall Street.

Smith quit his job as a vice president of Goldman on Wednesday in a blistering, public op-ed column in the New York Times. He charged Goldman with “ripping off” its clients by putting its pursuit of profit ahead of serving their best interests.  

“We are ensuring the regulatory agencies understand both the existence of Mr. Smith's column and its import,” Bartlett Naylor, financial policy advocate for Public Citizen, told FOX Business. “It's already been submitted officially to the Commodities Futures Trading Commission.  We attempt to have ongoing communication with agency staff and officials.  Several meetings are forthcoming where we will make sure they have seen this.”

But a leading bank trade group official downplayed the possible impact of Smith’s comments.

“I don't think it makes sense to set public policy based on what could amount to being a disgruntled employee,” said Scott Talbott, senior vice president for government affairs for the Financial Services Roundtable, which represents 100 of the nation’s largest financial firms (Goldman is not a member). “The best approach is a substantive one.”

Right now, the Federal Reserve, the Securities and Exchange Commission, the CFTC and other financial supervisors are crafting new regulations for big financial firms under the so-called Volcker Rule, which was part of the Dodd-Frank financial reform legislation Congress approved in 2010.

Named after its leading advocate, former Federal Reserve Chairman Paul Volcker, the rule prohibits firms from engaging in “proprietary trading”—owning and trading securities and other investments for their own account and profit.

Supporters say such activity promotes risky practices, including some that triggered the 2008 financial crisis, and helps create conflicts of interest with firms’ clients that Smith alleged in his column.

“As the agencies finalize the rule, they will be unable to ignore the Greg Smith column,” Naylor said. You can read Public Citizen’s letter to the CFTC, including Smith’s column at the bottom of this article.

Public Citizen and other groups charge that banks and Wall Street firms are lobbying regulators to create loopholes and exemptions from the Volcker Rule, to allow them to continue trading securities for their own account.    

“You shouldn’t be able to call it something else and get away with it,” said Heather Slavkin, a senior legal and policy adviser for the AFL-CIO’s office of investment. She said Smith’s column “confirms the bad behavior…has not stopped.”

Public Citizen and the AFL-CIO are part of a coalition, Americans for Financial Reform, that is pushing regulators to crack down on financial firms.

Another reform organization, Better Markets, urged Smith to join it this week to “make a difference.” His column “is absolutely something that we’re going to use” in lobbying regulators for tough provisions in the Volcker Rule, spokesman Bill Swindell said.

Talbott acknowledged regulators will consider Smith's comments as part of their rulemaking record, but said they should be cautious.

“We don't have all the facts, but setting public policy on one employee's comments is not a good way to proceed,” he said. “I think it will have a minimal impact. His letter doesn’t deal with the substantive aspects of Volcker, his letter deals with an accusation against his company in terms of its culture.”

Talbott said regulators should consider the entire record – 17,000 public comments filed by hundreds of stakeholders -- in finalizing the Volcker Rule, including banks' concerns.

“The way that Volcker is written, it’s so broad, it’s going to have tons of unintended consequences,” Talbott said. “It’s going to harm liquidity. It’s going to push U.S. activities overseas, or push these transactions to other players who may or may not be regulated. So what we’re trying to do is make it the most effective way to achieve this policy.”

Talbott also disputed Smith’s comments.

“Cheating your clients is not a long-term strategy,” he said. “What is the long-term viable strategy is where both parties to the contract benefit, where buyer and seller benefit…If your customers don’t feel they’re getting their money’s worth, they’ll leave in a New York minute.”

He added, “All companies look at this carefully to examine to make sure that they are continuing to serve their clients in a mutually beneficial way which occurs every day. That is something companies review every day to make sure they are serving their clients well.”

Regulators are expected to complete the details of the Volcker Rule later this year. It allows firms to continue to buy and sell securities as part of the “market making” services they provide customers for a fee or commission.

Peter Barnes joined FOX Business Network (FBN) in September 2007. He serves as FBN's senior Washington correspondent.