Unstructured Finance

Greg Smith says Goldman’s response confirms his criticisms: Q&A

October 22, 2012

Greg Smith, the ex-Goldman Sachs salesman who stunned the investment bank with a scathing public resignation in March, is now on the defense.

Smith, whose book, “Why I Left Goldman Sachs” hits bookstores today, has been facing the wrath of Goldman, media critics, and online commenters since last week, when bits and pieces of his book began to leak out and Goldman quickly jumped at the chance to characterize him as an undistinguished ex-employee with an ax to grind.

Goldman said Smith quit because he didn’t get the raise or position he wanted. It has also tried to cast doubt on the veracity of his claims by making other current and ex-Goldman employees available for media interviews to dispute Smith’s characterization of events in his book anecdotes.

Smith, a 33-year-old South Africa native and ping-pong champion, has also gotten some criticism from those who have read the book and found his story too naïve, too silly or, in some cases, too dishonest to be taken seriously.

Smith spoke with Reuters’ South Africa correspondent, David Dolan, about why he wrote the book, and responded to some criticisms from Goldman and the chattering class. He said he has received over 4,000 messages of support through email, Facebook and elsewhere since taking his concerns public in a New York Times op-ed. (Not to add another volley to this PR ping-pong game, but, in response to Smith’s response to their response, Goldman said his claims are not specific enough to investigate and that he did not respond to their repeated efforts to contact him.)

Some additional comments Smith made to Dolan can be found below, edited for clarity and space:

 

Why he went public with concerns:

They did this Business Standards Committee study and I just saw over and over and over again how it was lip service…After I had gone through a process of speaking to a lot of partners, I could see that even though a lot of people agreed, there was no incentive to change anything. I had this overwhelming feeling that it was the right thing to do to try to repair the system by saying something publicly.

On the reaction sparked by his op-ed:

My initial reaction was I was very excited and proud that it was sparking a debate which Wall Street does not want to have…I did not expect this kind of attention, this media barrage.

On criticism that the book does not have any big, new revelations:

The idea that overcharging a teachers’ pension fund or convincing a client to do the exact opposite of what you believe… or selling a product they don’t understand that will pay the firm a few extra million dollars, I don’t think those things as acceptable and I do see those things as serious charges.

On whether he’s just out to embarrass Goldman:

I was one of the proudest proponents of Goldman Sachs. I actually bought into the culture. There was the old Goldman principle of the long-term: if you do right by clients and tell them what you really think, ultimately they are going to trust you and come back to you. I want Goldman to be that again. I did not do this to embarrass Goldman or to do anything untoward. I want Goldman to take this seriously and address the problem and try to fix it.

On Goldman’s response to his accusations:

To keep denying there is a cultural or ethical problem is not just honest.

Behind closed doors, people acknowledge this is a problem. That’s what in my mind is so disappointing about Goldman just blanketly saying ‘there is no problem, we searched for the word ‘muppet’ and didn’t find it and therefore there is no problem.’ The thing I’m really surprised the media doesn’t see through is calling someone a name is what Wall Street is – it’s banter. That’s not a terrible thing. The terrible thing is you called a teachers’ pension fund a muppet because they did not understand the product they were trading and paid the firm an extra $2 million. That is the problem, not name calling.

What I’m really looking forward to is raising these questions and hopefully getting answers that do not have to do with searching emails but have to do with teachers retirement funds, betting against clients and overcharging them.

On Goldman’s characterization of him as a mediocre employee who quit because of compensation, or because he was likely to be fired:

What Goldman Sachs doesn’t seem to realize is that by doing this, they are almost confirming the things I said in the op-ed. This idea of, ‘win at all costs’ – the erosion of integrity. They are not addressing one single point that I’ve actually made.

I was doing well in my career. I was at the place for 12 years I survived in one of the most cutthroat environments in Wall Street. Out of the 75 people I started with as a summer intern, there were only 7 of us left.  My reviews were excellent and I would ask Goldman to release all my reviews. Release the emails from the seven partners who told me within before I left what a stellar job … There was a lot of praise coming in, and I grew the business there.

I think in a sense, talking about compensation and leaking reviews does not address the problem and, No. 2, I just think the idea of releasing confidential employee information does not strike me as high integrity way to go about addressing the issue.

Why relate the anecdote of Blankfein in the gym naked?

The reason I didn’t write a proscriptive, boring book… I wanted to reach a wide audience to show them what Wall Street’s really like and give them a window into it. I needed to tell my own story and make it accessible to people, so anything I write in the book, I mean in good spirits or good humor, I was not trying to embarrass anyone or hurt anyone.

What are you going to do when you are done promoting the book?

There is a real absence of people within the financial industry trying to advocate for positive reform. I would like to try to be part of that conversation in the medium term, whether that is helping regulators give insight into what goes on, whether its speaking to an audience of students, whether its writing more about it, I haven’t figured out what the right way to do it is.

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