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Thursday, March 15, 2012

The Goldman guy

In the past 24 hours there's been a lot of publicity about Greg Smith's opinion piece in the NY Times yesterday about why he's leaving Goldman Sachs:

http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?_r=1&pagewanted=all%3Fsrc%3Dtp&smid=fb-share

This guy started out awfully naive if he ever thought that Goldman was ever about anything other than making money. No one ever goes to Wall Street for any reason other than to get rich.

That noble-sounding saying about Goldman putting its clients first is a clever way to attract and retain business, but that's all it is: a pretty motto for public consumption.

Back when I was there, from 1984 to 1996, another of the firm's mantras was, "Be long term greedy rather than short term greedy." But I rarely saw evidence of anybody doing anything other than doing what was best for Goldman, whether short term or long.

Another thing we'd constantly hear internally was how Goldman prized teamwork and wanted only team players. But the people who did best there -- as is true across corporate America -- were those most skilled at backstabbing and other forms of corporate gamesmanship: the opposite of team players.

The character of the firm has not changed, as Greg Smith would have it. It used to be, is, and always will be, about making money as much money as possible.

Goldman used to get far better publicity than it deserved. Back in the 80's and 90's, from the way the press talked about the firm, you'd have thought its employees were a group of extraordinarily smart people who wanted nothing more than to make sure that Wall Street conducted itself honorably. I always had a hard time reconciling the place I read about to the place I worked. (Full disclosure: I did not go there out of a sense of public service.)

These days, however, the firm probably gets worse publicity than it deserves, mostly because of its success and influence. Trust me, every other financial firm on the Street would love nothing more than to be a great big vampire squid wrapped around the face of America and jamming its blood funnel into anything that smells like money. If they could only figure out how.

From a moral standpoint, Goldman is really no worse than any other financial institution. This isn't setting the bar high, but what do you expect? That people pursue careers at Citigroup or Deutsche Bank or Morgan Stanley or Goldman because there are no openings at the Peace Corps?

To believe that you'd have to be as naive as Greg Smith.

7 comments:

Anonymous said...

I've been saying the same thing to people. Goldman didn't invent the greed part of human nature, it's been around a long time at Goldman and everywhere else. Goldman's just done a better job of perfecting the practice of greed.

Anonymous said...

Just discovered this blog, and love it! Especially the sociopath alerts. I dated one 11 years ago, and I have been fascinated ever since.

Your opinions about sociopaths on Wall Street are spot on. Most people concentrate on violent criminals, and that is not always the case. So I value your opinion about this --

My question to you is about your time at Goldman. Do you really believe Jon Corzine is not a sociopath? That's surprising! Did you ever come across (disgraced bond trader) K. Ingram while at Goldman? Did he strike you as a socio?

From what others have told me (former GS men), the two were very cozy, and Ingram was Corzine's protegee.

I do think that sometimes sociopaths are drawn to one another.

John Craig said...

Anonymous --
Thank you very much. I came by my fascination with sociopaths the same way, by the way.

Yes, I did run across Kevin Ingram, in fact sat next to to him at a traders' meeting one time. In our brief conversation he told me he had been a butterflyer on the MIT swim team (without knowing that I had been a swimmer). I said that I had been a flyer too, and asked him what his time was for a 100. at that point, when it became clear that he was about to be caught in a lie, he just looked away and didn't answer. I realized that he'd never been a flyer, was just "augmenting" his resume; he certainly wasn't built like a flyer. And yes, I do think he was a sociopath.

I think the reason he may have been Corzine's protege was that Corzine, good liberal that he is, was trying to place more successful blacks on the trading floor, not encourage a sociopath. I remember hearing one time that he had said, somewhat disconsolately after another black trader had been fired, "We don't do a very good job hiring blacks."

I can see why you might think that Corzine might be a sociopath from reading the headlines, but I just never got those vibes from him while there, and I did get those vibes from plenty of people at GS. I was just a lowly VP while there, so I got the worm's eye view of a lot of people, but that is actually usually the more accurate frame from which to view peoples' character.

In case you haven't seen them, check out the two posts I wrote about Corzine on November 30, 2011, and December 8, 2011. I give my verdict on him there.

Anonymous said...

kevin has been swimming on teams since he was 8 years old and yes he did swim the butterfly while at the MIT. so before you go out assuming that someone is lying because they do not answer your question for whatever reason maybe because he thought that you were not interesting. Check out your facts. And believe me you couldnt out swim him on his worse day. Now him being a sociopath . . . well I'm not going to discuss that because most geniuses have some issues anyway and genius he is.

John Craig said...

Anon --
Ingram is the one who brought up the subject of swimming for some reason, maybe he didn't find me interesting (it was a very brief conversation), bu tif he bought it up and I asked the question, it was weird not to answer.

And I couldn't out swim him on his worst day. You might want to "check out your facts," as you advised me. MIT had a third rate team when he was there, there's no possible way he was better than me.

And he's a genius? By whose definition?

Anonymous said...

Seems you were at GS the same time trader/md/partner Gary Williams was there. Ever meet him?

John Craig said...

Anon --
No, I didn't. It was a big place. When I joined in 1984 they had roughly 10,000 people working there, by the time I quit in 1996, they had closer to 20,000. I worked on a trading desk with seven other guys, and had contact with maybe 100 or so other people in the course of my job.