Greg Smith says Goldman’s response confirms his criticisms: Q&A
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:
Wall Street pay: Headed up or down?
It was a good third quarter for Wall Street profits and an even better one for employees: Goldman Sachs and Morgan Stanley set aside another $7.6 billion in compensation during the period, with year-to-date pay for the average employee up 15 percent at Goldman and 3 percent at Morgan Stanley.
Total comp accruals for both firms so far this year are up to $23 billion, 2 percent higher than the amount set aside a year ago. That equates to or 47 percent of adjusted net revenue, down from 50 percent for the first nine months of 2011, but still much higher than the pay levels some shareholders are demanding.
The data are a little befuddling, since New York State Comptroller Thomas DiNapoli recently said he expects Wall Street to lose jobs this year, and for pay to drop. Recruiters and Wall Street pay consultants have also said they expect pay to either decline or remain relatively flat for many kinds of traders and bankers this year. And JPMorgan’s investment bank has already started chopping down banker pay.
The new Goldman way: Less cushy compensation?
By Lauren Tara LaCapra
On a conference call to discuss Goldman Sachs’ new chief financial officer yesterday, an analyst asked departing CFO David Viniar why he was leaving when the stock is at a historic low.
Viniar avoided the question by joking that his successor, Harvey Schwartz, would trump that performance. But some investors think they have a better way to fix Goldman’s stock slump: cut back further on comp.
S&P calls baloney on Wall Street’s “cyclical” profit view
By Lauren Tara LaCapra
Ask a Wall Street CEO whether his bank will be able to make as much money as it used to make, once customers start trading and doing deals again. He will inevitably respond with some form of “Yes!”
Ask just about anyone else with a shred of common sense and the answer is more along the lines of “hahaha…you’re kidding, right?”
UF’s Weekend Reads
Here is Sam Forgione’s suggested weekend reads. Happy St. Patrick’s Day everyone. The calendar says March but it feels like mid-May in NYC.
From Dealbook:
When it comes to its hedge funds, Goldman is on the CAIS
By Katya Wachtel
Goldman Sachs’s own hedge fund product — like the now defunct Global Alpha — is generally reserved for the checkbooks of the investment bank’s wealth management clients. But not always.
For investors looking to get a piece of a Goldman hedge fund for a discount (and without having to actually be a Goldman private wealth customer) the investment bank is offering one of its commodity-focused hedge funds on a third party platform: CAIS.
Goldman vs Goldman
By Jennifer Ablan and Matthew Goldstein
Goldman Sachs’s chief executive Lloyd Blankfein and his likely successor, Gary Cohn, issued a formal response today following a scathing op-ed in the New York Times from Greg Smith, who announced his resignation from the investment firm.
Smith, a banker who worked in Goldman’s equity derivatives group, asserted that several Goldman managing directors had referred to their own clients as “muppets.” In Britain, where Smith is based, “muppet” is used as a derogatory term to describe someone who is regarded as being ignorant.
The Book of Goldman
By Katya Wachtel and Lauren Tara LaCapra
Al Crutchfield, a 56-year-old cab driver who has spent most of his life in Salt Lake City, does not understand why so many Americans are angry at Goldman Sachs.
“Everyone seems to be so mad at them all the time, but I think it’s a good thing for Salt Lake that Goldman’s expanding here,” he said. “I drive lots of Goldman Sachs employees, so it’s good for my business, and their folks are really nice.”
The taxman cometh for MF Global
By Matthew Goldstein
You can add the U.S. Internal Revenue Service to the long list of creditors and customers looking to get their money back from MF Global, the failed futures brokerage firm.
The IRS slapped a lien on what’s left of MF Global, seeking to recoup some $395,000 in unpaid taxes stemming from 2006 and 2007. The tax lien was filed with New York State’s division of corporations on Nov. 16, about three weeks after MF Global filed for bankruptcy.
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About Unstructured Finance
The Reuters blog where Wall Street and Main Street meet; edited by Matthew Goldstein and Jennifer Ablan.
