It’s not easy being Goldman Sachs Group Inc. (GS)
Senators grill you. Reporters compare you to blood-sucking ocean creatures. Ungrateful former employees trash you in the pages of the New York Times.
Now, Greg Smith, Goldman’s most famous opinion writer, has produced “Why I Left Goldman Sachs.” It tells the story of his 12 years at the firm, from an internship in the New York City office in 2000 to the roughly $500,000-a-year job as an executive director he walked away from in London.
The book has everything from seven Goldman guys in a Las Vegas hot-tub with a topless 23-year-old (“Ms. Silicone”) to the perhaps less-electrifying image of chief executive Lloyd Blankfein “walking around the changing room au naturel to dry off from his shower” in the Goldman gym.
Smith describes his journey with a Wall-Street caliber perspective. That is to say, he has none.
He makes points worth reading, but to get something out of “Why I Left,” you need to come equipped with your own understanding of Wall Street’s long history of conflicts, hype and fraud, which the author mostly skips.
Smith gets it right that Goldman (like its Wall Street brethren) is ridden with conflicts and is flush with revenues from confusing and hidden fees.
He’s also on target that Goldman has advanced an image of itself as being more ethical and sympathetic to customers than its competitors. It’s a pity Smith didn’t take a microscope to the ambitious public relations work that has helped the firm pull off such a farce.
Though he shows little sign of self-reflection, in fits and starts he moves from Goldman cheerleader to whistle-blower-in-the-making.
When he learns in 2010 that his employer has been sued for fraud by the Securities and Exchange Commission, he’s a Kool-Aid-drinking Goldman cheerleader, assuring himself it must be a “witch hunt.”
Later, though, Smith starts to notice that the firm’s culture, featuring a revered set of “Business Principles,” might not be operating as advertised. When he’s promoted to a job in London, he observes that his U.K. coworkers regard customers as quarry for the kill.
One colleague boasts that a clueless client didn’t bother to check with competing brokers to see if a price was fair, so he overcharged the “Muppet” $1.5 million on a trade.
When asked to respond, Goldman spokesman David Wells said, “We conducted an extensive review of the claims Mr. Smith made in his op-ed and found no evidence to support them.”
Even before the book was printed, Goldman taught Smith a lesson that will resonate with would-be whistle-blowers weighing the risks of going public. In a creepy corporate Big Brother move, the firm made a point of letting Smith know it had caught him on surveillance tape leaving the London office the night he packed up.
Goldman also took the liberty of feeding select information from Smith’s personnel file to Bloomberg News. One of the more hilarious revelations is that the 33-year-old pushed hard for more money than he might have been worth. Can you imagine such a thing happening on Wall Street?
Indeed, Goldman should have appreciated that Smith was in some ways made in Wall Street’s image. He worked hard, loved the trappings of top hotels and fine food and even hints that he has the sort of attitude about women that can help a guy get ahead.
One female boss was very smart and, like other managers, very tough. “With her, though, the toughness included a certain callousness.” Really? Is callous what you get when the tough manager is a woman?
In April 2010, the day after top Goldman executives were publicly lambasted by a U.S. Senate panel investigating the firm, Smith had an unfortunately timed meeting with a big client in Asia. The customer wasted no time giving his opinion, Smith says.
Goldman wouldn’t be losing his business because he still saw the benefit of doing some trades with an outfit that had so many smart people. Let there be no mistake about one thing, though, as Smith recalls.
“The truth is,” the customer said, “we haven’t trusted you guys for a long time.”
(Susan Antilla is the author of “Tales From the Boom-Boom Room,” a book about sexual harassment at financial companies, and a Bloomberg View columnist. The opinions expressed are her own.)
To contact the editor responsible for this column: Manuela Hoelterhoff in New York at firstname.lastname@example.org.