Why I Left Goldman Sachs

  • 24 Oct 2012 at 2:32 PM

OH NO HE DI’INT!

Speaking on CNBC, Blankfein said he hasn’t read Smith’s Book, “Why I Left Goldman Sachs: A Wall Street Story,” which hit bookstores on Monday. He noted some reviewers said it wasn’t worth the hour and a half it would take to read. [Deal Journal]

“I landed in New York at JFK International close to midnight on the day the op-ed was published. My picture had been all over the place, and I wasn’t sure if people would recognize me, so– perhaps stupidly– I wore a makeshift disguise: a dark brown straw fedora and an unshaven beard. I headed straight for Phil’s place on Seventy-Ninth Street and Third Avenue. Phil had arranged a blow-up mattress for me to sleep on, and said I should come straight over when I landed.”Why I Left Goldman Sachs, Afterward

Opening Bell: 10.22.12

Some Investors Open to Higher US Tax to Shave Deficit (Reuters)
In recent weeks, Goldman Sachs CEO Lloyd Blankfein and JPMorgan Chase’s Jamie Dimon became the latest Wall Street heavyweights to say they would be willing to pay more in exchange for a deal to balance the country’s books.

AIG’s Benmosche On Why Capitalism Still Works (NYM)
As its vaguely omnipotent name suggests, American International Group contained a little of everything: a small bank, an airline-leasing company, and a terrifyingly vast array of international companies that underwrote everything from cows in India to satellites orbiting the Earth. To the emergency team that came in following the crises, the impulse was to get rid of everything, to disassemble this Frankenstein monster once and for all. This was the idea behind Project Destiny. Benmosche had a different one. “Say you’re sitting there, you have gangrene,” he says to me one morning, before I’ve even had coffee. “And I don’t have any instruments. All I have is an ax. And I’ve gotta grab the ax and cut that sucker off. But the ax is dull. And it makes a mess. That’s what they did, in the beginning. They whacked that sucker off. And they kept hacking. But there was value in the body that was left. The body could produce things. And it owed people. What are you going to do, kill the body? Want it to be so ugly and deformed that it could never live? No! What you do is you clean it up, make it more cosmetic. Maybe we can help them get a prosthesis. Maybe they can run in the Olympics one day, like a double amputee, as we saw. Can you imagine that? A double amputee running in the race.”

Goldman Bonus System Corrupted In 2005, Smith Book Says (Bloomberg)
Before 2005, the company determined workers’ annual awards “not just on how much business you’d brought in, but also on how good you were for the organization,” Smith, a former vice president, writes in “Why I Left Goldman Sachs: A Wall Street Story.” “From 2005 until the present day, the system has become largely mathematical: you were paid a percentage of the amount of revenue next to your name,” a figure that could vary from 5 percent to 7 percent, wrote Smith, 33, without saying how he learned about such a change. “The problem with the new system was that people would now do anything they could — anything — to pump up the number next to their name.”

129 Minutes With Goldman Turncoat Greg Smith (NYM)
With the book done, Smith says he’s looking forward to resuming a normal life, possibly as a speaker and pundit. Among other things, he’d like to meet a woman. “I’m not anti-capitalism at all,” he says. “I want Goldman to be admired. I just don’t like this notion that ethics and capitalism are different things.”

Argentina orders evacuation of ship seized by hedgie Paul Singer as collateral for unpaid bonds (AP)
Argentina announced the immediate evacuation Saturday of about 300 crew members from the ARA Libertad, a navy training ship seized in Africa nearly three weeks ago as collateral for unpaid bonds dating from the South American nation’s economic crisis a decade ago. Only the captain and a few other members of the crew of 326 sailors will remain on the three-masted tall ship, a symbol of Argentina’s navy.

Girl, 9, in black and white costume shot as relative mistakes her for skunk (NYDN)
A 9-year-old girl was shot outside a Halloween party Saturday night in Western Pennsylvania, taking a bullet to the shoulder from a male relative who mistook her for a skunk. The condition of the girl wasn’t released Sunday, but police in rural New Sewickley Township said she was alert and talking as she was flown to a hospital in Pittsburgh, 30 miles away. Neither the girl nor her relative was identified. She was spotted on a hillside around 8:30 p.m. wearing a black costume and black hat with a white tassel, according to the Beaver County Times. The relative who accidentally injured her was carrying a shotgun. Police Chief Ronald Leindecker said the man wasn’t under the influence of alcohol, and was unsure whether he would be charged. Read more »

Goldman Sachs found no support for claims by Greg Smith, a former employee, that the firm has stopped putting clients first, said Edith Cooper, global head of human capital management. “As we looked into his claims I was very pleased to see there wasn’t merit,” Cooper, 51, said on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. [...] “Quite frankly, he got to a point where he was not comfortable being at Goldman Sachs. We have done everything we could to make sure his claims were not valid. I am confident in suggesting that we have not found anything substantive. Instead, we have moved on.” [...] Goldman Sachs says that Smith, before he resigned, was denied a promotion and a $1 million pay package he had sought. The firm also says that Smith was the lowest-paid among the vice presidents who started in the same training class, and that a third of those classmates had been promoted to managing director. [BloombergTV, Bloomberg]

  • 18 Oct 2012 at 7:54 PM

Area Man Recounts Brush With Greatness

In this case, greatness being Lloyd Blankfein’s glistening, stark-naked body. Read more »

Opening Bell: 10.18.12

Morgan Stanley Posts Loss (WSJ)
“The rebound in fixed income and commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter,” Chief Executive James Gorman said, referring to Moody’s Investors Service’s move over the summer to downgrade the credit rating on more than a dozen banks. “We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management.” For the quarter, Morgan Stanley reported a loss of $1.02 billion, compared with a year-earlier profit of $2.2 billion. The per-share loss, which reflects the payment of preferred dividends, was 55 cents compared with a profit of $1.15 a year earlier. Stripping out the impact of debt-valuation changes, the per-share profit was 28 cents versus two cents a share a year ago. Revenue fell 46% to $5.29 billion, including a negative impact of $2.3 billion from the tightening of credit spreads related to debt. Stripping out debt-valuation changes revenue was up 18% to $7.55 billion. Analysts polled by Thomson Reuters expected earnings of 24 cents, excluding gains related to debt, on revenue of $6.36 billion.

Morgan Stanley Reduces Investment-Bank Pay to $5.2 Billion (Bloomberg)
The ratio of compensation to revenue in the unit fell to 44.9 percent, compared with 48.4 percent in the same period a year earlier, when excluding accounting gains and losses related to the firm’s credit spreads. That’s still higher than Goldman Sachs and JPMorgan’s investment bank. Compensation and benefits for all of Morgan Stanley totaled $12 billion in the first nine months, down 4 percent.

Goldman Ex-Employee Says Firm Pushed Europe Bank Options (Bloomberg)
Goldman Sachs sought to profit last year by persuading clients to buy and sell stock options on European banks such as BNP Paribas SA and UniCredit SpA, according to former employee Greg Smith’s new book. “We must have changed our view on each of these institutions from positive to negative back to positive ten times,” Smith writes in “Why I Left Goldman Sachs: A Wall Street Story,” scheduled for release on Oct. 22. “I remember thinking, ‘How can we be doing this with a straight face? No thinking client could believe that conditions on the ground could change that frequently.”’ [...] Smith also describes being disappointed with his $500,000 bonus at the end of 2006. “By any measure, I should have felt exceptionally lucky and grateful,” he writes. “But by the warped logic of Goldman Sachs and Wall Street, I was being screwed.”

U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says (Bloomberg)
“The U.S. will get downgraded, it’s a question of when,” Scott Mather, Pimco’s head of global portfolio management, said today in Wellington. “It depends on what the end of the year looks like, but it could be fairly soon after that.”

Asian Scion’s Trades Draw Scrutiny (WSJ)
A federal probe into an alleged multimillion-dollar insider trading scheme is focusing on the son of a deposed Central Asian autocrat once courted by the U.S. as a key ally in the war on terror, according to people involved in the investigation. The globe-spanning criminal case marks a turnabout by the U.S. against a ruling family it once relied on to keep open military supply lines to Afghanistan. For years, the U.S. maintained good relations with then-Kyrgyzstan President Kurmanbek Bakiyev. Now, the U.S. has prepared charges against the former strongman’s son, Maksim Bakiyev, who officials say spent some of his exile in London profiting from illegal tips on stocks trading on the New York Stock Exchange and Nasdaq. On Friday, the younger Mr. Bakiyev, 35, was arrested in England on an extradition request from the U.S. Mr. Bakiyev’s U.K. attorney, Michael O’Kane, declined to comment.

Computer programmer ‘quadruples productivity’ after hiring a woman to slap him in the face every time she catches him looking at Facebook (DM)
Maneesh Sethi placed an advert on Craigslist to recruit someone willing to monitor what he was looking at on his laptop. The computer expert and writer, from San Francisco, now pays a female employee £5 ($8) an hour to strike him in the face if she spots him wasting time on social media. Mr Seethi claims the unusual motivational system has helped him boost his productivity from just 35 percent to around 98 percent during the working day…Mr Seethi published details on his blog of his Craigslist advert, which was entitled ‘(Domestic gigs) Slap me if I get off task’. In it he wrote: ‘I’m looking for someone who can work next to me at a defined location (my house or a cafe) and will make sure to watch what is happening on my screen. ‘When I am wasting time, you’ll have to yell at me or if need be, slap me. You can do your own work at the same time. Looking for help asap.’ Mr Seethi said he was inundated with offers from potential slappers and quickly hired a volunteer he names only as Kara. He wrote: ‘Within minutes, my inbox began blowing up. Read more »

Lesson 1, according the first chapter of Why I Left Goldman Sachs (“I Don’t Know, But I’ll Find Out”): the difference between a sandwich and a salad. Read more »