The Bank That Broke His Heart

Greg Smith’s bitter goodbye to the firm he once loved.

By Bryant Urstadt

Smith is unaware of how awesome he thinks he is


Why I Left Goldman Sachs: A Wall Street Story

By Greg Smith

Grand Central Publishing

277pp; $27.99

Goldman Sachs, as Greg Smith tells it in Why I Left Goldman Sachs, didn’t treat its clients very well. He was so upset about this that he quit. But instead of giving two weeks’ notice and heading off to some pub to toast his 12 years at the company, Smith sent an editorial to the New York Times. Then he grabbed his stuff from his London office on a Saturday night when he knew no one would be in and flew back to New York. The article ran the following Monday, March 14. A media pile-on and a $1.5 million book deal followed.

For some, he was a hero: a man of principles exposing the shadowy power that duped its customers while enriching itself, standing up at his own expense for an institution he loved. For others, Smith was a rat, a self-interested turncoat of the lowest variety. In this line of thinking, a principled man who thinks a firm is not treating its clients right should contact HR and get some paperwork on corporate values rolling.

Goldman Sachs’s secret culture has long been both a point of pride for the company and a source of annoyance for those not on the inside, which is why all the seemingly trivial scraps in Smith’s Op-Ed have been pored over obsessively — a practice that will no doubt continue with the book. For example, in his original article and in a corresponding section of the book, Smith related that traders in London sometimes called their clients “muppets.” This was not meant to convey that the clients were funny or that they often broke out in song, but that they were unintelligent and easy to manipulate. There is debate over how much of a putdown it actually is to call a person a muppet, or whether it was really used at the firm. James Stewart, a business columnist at the New York Times, reports that “muppet” is common slang in London. Goldman Sachs hired forensic specialists to search firm e-mails for mention of the word “muppet.” The result, part of a nine-page document, was delivered to Bloomberg News in advance of the book’s publication. They turned up a lot of references to the new Muppet movie, but no client-Kermits.

Smith will likely find work again, despite his exit style. He’s obviously smart and understands some of the more complicated aspects of trading on Wall Street. He was an employee of value at Goldman, no matter how the firm wishes it weren’t true. But he likely won’t find work as a writer. His editor might want to find another line of work, too. Just to give a very small sample of the level at which Smith writes: “It was surreal” appears six times in this short book. People he likes are “cool.” He finds conversations like the following worth recording: “Change is scary,” a colleague tells him. “But often change is good. It can lead to new and interesting experiences. Keep your head up and keep an open mind.”

Conversation about the book has become a referendum on Greg Smith as a person. This is a tough battle for Smith to win, at least as he portrays himself in print. He is unaware of how awesome he thinks he is. In his telling, he is ever the perfect employee, cruising through assignments with few mistakes. He and a colleague, he writes, became known as “the guys who, if you needed to put the ball in someone’s hands in the final stretch of the game, were not going to screw it up under pressure.”

The memoir, like the dinner story, is a genre that thrives when the narrator is self-effacing, the butt of all jokes — Michael Lewis, in Liar’s Poker, takes his own advancement as a sign that something’s not right at Salomon Brothers. Smith reverses this paradigm entirely. He compliments himself on his “dry sense of humor” and how he saves parties with his jammin’ iPod. In one of the strangest subplots, he details his international triumphs in Ping-Pong. In 1993 he represented South Africa in the Maccabiah Games. He “took the gold medal,” and has the special blue blazer to prove it.

Such self-regard is probably at the root of Smith’s problems with Goldman Sachs. It may be the result of a missing, and crucial, faculty: skepticism. Smith’s overestimation of his own abilities may have been reflected in his judgment about an institution whose purpose is to profit on financial transactions. He writes that he loves Goldman Sachs enough times that a reader just can’t doubt it. He seems to have developed a real crush on the place, in a first-kiss kind of way. He prides himself without irony on being a “culture carrier,” one of the employees who gets why the firm is great, and looks out for its long-term health and interests in the most official way. He writes that he looked forward to a “mandatory training session” in London. And he’s deeply disappointed that more people weren’t excited about the firm’s recommendations for best practices.

As for the love interest, Goldman Sachs seems to have enjoyed their arrangement while it lasted. Smith was well paid. He earned $200,000 annually in his years as an associate and $500,000 a year running the London side of the U.S. equities business. But the firm had other interests, and when Smith came up one too many times against the reality of the business — you really are what you earn, and the client will never matter more than that — he was heartbroken. So he wrote the financial world’s most well-read breakup letter.

The lesson of the book is as useful for fund managers trying to get an order executed and company captains sitting through a merger pitch as it is for a new hire enjoying her first perks. Don’t love a financial institution too much, no matter how good it makes you feel sometimes. In the end, it will never really love you back.


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