BOOK REVIEW

Why I left Goldman Sachs – Greg Smith

Ex-banker’s quasi-moral crusade puts a spotlight to greedy Wall Street practices   

        Having little first-hand exposure to the financial sector, the sparse knowledge I’ve accumulated has come from university finance courses, staying close to industry news and picking the brains of several friends who have worked on both Wall Street and Bay Street, Toronto’s equivalent. Despite some notable shortcomings, I found this book a gratifying complement to my understanding of this enthralling industry. It reads as a hybrid of a career memoir and a whistleblowing exposé, flavoring the focus on GS’s moral compass with the author’s personal context.

          Smith begins by sharing his journey from South Africa to Stanford and eventually to the Equities trading floor of Goldman Sachs via the firm’s internship program. His initial enamorment and sense of self-accomplishment lead to a blindfolded swallowing of GS’s ostensible modus operandi, cemented in Business Principle #1: Our clients’ interest always comes first. Even in the face of shadiness, he admits to awarding his employer the benefit of the doubt for many of his early years. One such instance was when Goldman Sachs brokered a $9bn merger between the New York Stock Exchange and a smaller exchange called Archipelago, of whom it was the second largest shareholder and thus on both sides of the deal. Officially dismissed as a “promotion of stability in financial markets by managing conflict”, Goldman netted $100m for its role, which Smith perceived as an inventive way to simultaneously walk the line and assist clients.

          However, as he relates his dozen-year climb up the corporate ladder to a vice-president role in London, he claims a growing disillusionment at the firm’s conduct. He noticed a shift in corporate culture, from never taking on reputational risk and prioritizing clients, to acting as a hedge fund by using high-risk leverage to buy investments and also engaging in proprietary trading with its own money. As he charts his eroding faith in Goldman’s integrity, he is frustratingly vague with details on any particular deals that caused him discomfort; indeed, the only examples proffered are those that are already public knowledge. This is where the book begins to lack substance, for even as he tells of meetings with nine partners in his final year, apparently to question leadership’s moral fiber, he mentions no specifics or even an allusion to their responses.   

          Smith’s resignation is introduced abruptly, and in absence of a clear trigger I am suspicious that it was driven more by his being overlooked for a promotion (frequently referenced) than outrage at a new act of egregious behavior. He does point to his antipathy at hearing colleagues mock clients as ‘muppets’ and the intentionally convoluted products sold to Greece to cover up the nation’s debt, but his money-oriented nature fills me with doubt on the sincerity of his intentions. This book follows the publication of his New York Times op-ed but on further research I found nothing to support he continues to work on his stated goal of “changing the system”. Erudite as this work is, enough that it would enthuse anyone curious about the culture of finance, I’ve concluded the author simply saw an opportunity to cash in on his experiences at one of the world’s most prestigious companies.  As such, I would recommend prospective readers borrow a copy from the library rather than purchase their own, for this will simply further bulge the author’s over-inflated bank account. 

-NP, June 2015