Macaskill on markets: Greg Smith and Goldman Sachs – The inside story
As Greg Smith snags a $1.5 million advance for the rights to his memoirs, Euromoney columnist Jon Macaskill imagines what the former equity derivative specialist might reveal about his career at Goldman Sachs
Greg Smith, the former Goldman Sachs employee who caused a splash with his resignation letter, has acquired a deal for a book based on his time at the firm. Euromoney has obtained notes Smith may have kept during his 12 years at Goldman...
On my first day at Goldman Sachs I met Mr [Lloyd] Blankfein, who later became CEO of the whole firm. He performed magic tricks for the graduate employees and told us that our culture was the secret sauce that explained why clients had trusted Goldman Sachs for 143 years.
“What is the key ingredient in our secret sauce?” I asked him after his presentation.
“Misdirection?” he said, packing away his magic box. “No, I’m only kidding. The key to the secret sauce is teamwork. And always cutting in the big guys first after you put a trade on.”
I worked very hard in New York and after only seven years I was put in charge of making recruitment videos for students. Then one day Mr [John] Rogers, who books meetings for Mr Blankfein, asked me to help Mr [Gary] Cohn arrange our list of clients. Mr Cohn became president after Mr Blankfein was appointed CEO, so he is very important, though he gets through a lot of team members.
I thought it would be a good idea to put our list of clients on the company intranet, where everyone could see them and try to help them even more. But then disaster struck! Instead of putting up the client list I posted Mr Cohn’s file marked E List.
“That is Gary’s enemies list, not the client list,” said Mr Rogers. “This is going to be a problem – half of these people still work here and the rest of them run hedge funds.”
I asked Mr Rogers if I should go into Mr Cohn’s office to apologize. “I don’t think you should be anywhere near Gary right now – I mean, this is a guy who once hit Tom Montag with a chair leg,” he said. “Maybe we should transfer you to the London office. Woody [Michael Sherwood] is going to love you.”
The very next day I moved to London where they gave me a job helping clients who were having problems with their old trades.
“We are talking primo muppets here mate,” said one of my new friends on the trading floor. “Greece, Libya, CDO buyers. The trick is to blame someone who left the firm and offer a big discount on a new deal.”
I didn’t know how a client could be a muppet, so I asked Mr Sherwood, who is in charge of the London office. “If you are in a meeting and you don’t know who the muppet is, then you are the muppet,” said Mr Sherwood.
I still didn’t understand, but my friend on the trading floor said that Mr Sherwood is a bit like Mr Cohn and you shouldn’t ask him too many questions.
Dealing with the old clients was easy at first. Nobody even answered the phone in Libya and our Greek client said he would let bygones be bygones if we agreed to put in a word for him with Mr [Mario] Draghi at the ECB. “Some day, and that day may never come, I’ll call on you to do a service for me,” he laughed. “And tell Addy I said hello.”
Addy is Ms Loudiadis, who used to be in charge of big client trades in Europe. She still works in our London office on Fleet Street, where the newspapers used to be, but now she is in charge of an insurance firm called Rothesay. I asked her whether that means that she is a client.
“Not exactly darling, but we have to be creative,” Ms Loudiadis said. She suggested that I draw up a list of any clients who complained about old trades and blame them all on Mr [Edward] Eisler, who used to be in charge of making sure that interest rates were set at the right level before he left the bank.
Then my friend on the trading floor told me that Mr Eisler might turn out to be a client soon so I should probably wait before I start blaming him. It is sometimes difficult to tell who is a client nowadays!
I decided to talk about this to Mr [Richard] Gnodde, whose business card says he is co-head of the London office with Mr Sherwood, though my friend on the trading floor said he isn’t really.
Mr Gnodde is from South Africa, just like me. He works in corporate finance where it is always clear who your client is, except when you have clients on both sides of the same deal.
“Just keep a list of all these issues and let me have a look from time to time,” said Mr Gnodde. “Who knows? Maybe Gary and Woody won’t be running the show that much longer. What if some of this started to get out, for example...”
If only I could think of a way to let people know just how important client culture can be for a leading investment bank!
Jon Macaskill is one of the leading capital markets and derivatives journalists, with over 20 years’ experience covering financial markets from London and New York. Most recently he worked at one of the biggest global investment banks