Greg Smith wrote the essay that echoed across Wall Street like a thunderclap.
Smith was a vice president at Goldman Sachs until March. He announced his departure from the investment bank with a blistering op-ed essay in the New York Times, accusing Goldman of routinely deceiving clients and relentlessly pursuing profit at the expense of morality.
And he struck a nerve. The essay went viral in the financial world and beyond.
Goldman denies Smith’s allegations about deceiving clients. The bank says it took his concerns seriously, thoroughly investigated them and found no evidence to support them.
Smith’s book, “Why I Left Goldman Sachs,” was released Monday. Smith, 33, gave his first text interview to the Associated Press, with excerpts edited for clarity and length:
Q: Tell us about March 14, the day you left Goldman. You were working in the London office 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 said 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. There’s been an SEC fraud suit that was settled for half a billion dollars.
(The Securities and Exchange Commission accused the bank of selling investments to clients when the bank believed the investments were going to fail. Goldman paid $550 million, the largest SEC penalty paid by a Wall Street firm.)
Q: Weren’t there times when you should have stood up and said something about what you thought was morally wrong?
A: I actually made a conscious decision not to sell toxic deals to clients. I didn’t think it was the right thing to do, but I also saw the idea that if clients’ trust is being burned and they’re getting blown up, you’re not going to have a career for very long.
Now that does not mean I was not part of a system that was doing things that were unethical. … For many years, I gave the firm the benefit of the doubt.
Q: Isn’t the purpose of any capitalist company to make money?
A: Capitalism should be where everyone competes hard and makes money, in an environment where there is fair play and competitiveness. Right now, the system is stacked against everyone else in favor of the banks.
It’s a little like a casino. A real casino is regulated, and there are cameras everywhere, and the casino cannot see your cards. With Wall Street today, the bank can see what every government, every pension fund, every hedge fund in the world is doing. They can effectively see everyone’s cards. Then, instead of facilitating the client’s will, they’re trying to get the client to facilitate their will.