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Goldman VP details why he walked out
Question of the Day
Greg Smith wrote the essay that echoed across Wall Street like a thunderclap.
Mr. Smith was a vice president at Goldman Sachs until March. He announced his departure from the investment bank with a blistering essay in The New York Times, accusing Goldman of routinely deceiving clients and relentlessly pursuing profit at the expense of morality.
The essay went viral in the financial world and beyond. Mr. Smith was praised for uncloaking corruption that was crying out to be addressed, and also derided as a disgruntled employee. Goldman Sachs denies Mr. Smith’s allegations about deceiving clients. The bank says it took his concerns seriously, thoroughly investigated them, and found no evidence to support them.
Mr. Smith’s book, “Why I Left Goldman Sachs,” was released Monday. It’s a window into a company that is notoriously tight-lipped, with stories about a swaggering place where interns arise for 5 a.m. meetings and business trips mean slapping down $150 for one person’s dinner. Mr. Smith, 33, gave his first text interview to The Associated Press. Excerpts have been edited for clarity and length.
Q: Tell us about March 14, the day you left Goldman. You were working in the London office, and you say you had already cleaned out your desk and had been told the essay would go online at 7 a.m. your time.
A: I get up at 6 a.m., and I type a very heartfelt email to nine people in Europe, including the CEO of Goldman Europe, and express in very personal terms why I’m leaving. I talk about exactly what I thought was wrong with the place, this obvious deceit of clients.
Within five minutes I get an email back from someone on the management committee in Europe who says, “I’m really surprised to hear this. I’m in London today. I’d love to meet with you.” I get two voice mails from two other people. And then at 6:57 or 6:58, the piece comes online.
Q: What did the bank do?
A: My work BlackBerry stayed on for about three more hours, and I started getting emails from clients who were saying, “We completely agree with you, we don’t trust Goldman Sachs, we do business with you guys with a ‘buyer beware’ attitude.” I started getting text messages from Goldman managing directors who were supportive as well. And Goldman reached out to me in formal fashion and said, “We’re sorry to hear you resigned. We’d like to air these concerns out.”
Q: The bank denies everything you’ve charged about its ripping off clients.
A: The thing that disappoints me most is that management is denying there’s a problem. Why not try to repair the trust instead? Clients are telling you they don’t trust you. … I’m not some lone voice who thought there was a problem, a change from a client-fiduciary model to use-the-client-to-extract-wealth model. It’s a problem that many, many of my colleagues felt and that the public feels as well, borne out in [Securities and Exchange Commission] suits and congressional testimonies and clients saying publicly that they don’t trust us.
Q: Were you just disgruntled? Maybe you didn’t get the bonus or the promotion you wanted?
A: I was actually doing well in my career at Goldman. My bonus, I was told I outperformed my peers by 10 percent. I’m a competitive person, and my goal was to get promoted, and I was told by multiple partners that I was two years away from getting promoted. So it certainly was a goal of mine. And on the compensation side, I was earning a lot of money and had a very good living, so I was grateful for what I was earning. It allowed me to have a good life and to support my family and to do things that I thought were valuable.
Q: Why should we care about what happens on Wall Street?
A: You see a lot of commentary that Wall Street is just rich people gambling with other rich people’s money. I want people to know that it ultimately affects everyone. In 2008, banks had to be bailed out and that hits taxpayers. If you’re a teacher or a fireman or a charity, and you have an investment fund that is trading with Wall Street, and Wall Street is not being held accountable and behaving ethically, then that directly impacts everyone.
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