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The Man Who Quit Goldman Sachs and Wrote a Tell-All Book Gets Trashed by Corporate Media

Wall Street hates Greg Smith for telling the world of rampant abuse in one of its most prestigious firms.

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And some of Goldman’s reactions were telling. Smith charged that the firm changed its recommendations on specific European bank stocks frequently, based on the firm’s position. Goldman’s defense was legalistic: that wasn’t Smith’s area (so gossip doesn’t travel? Please), and the firm didn’t have prop trades on (hello, the customer desks have positions as well).

But let’s get to the more interesting question: why is Smith’s book thin on the sort of salacious detail that the many of his critics clearly wanted him to serve up? There may have been legal concerns. Note that fellow Goldman alum Tetsuya Ishikawa wrote a thinly disguised autobiography in the form of a novel; it’s not hard to tell which of the several firms his main character worked for is meant to be Goldman, and his book is full of the liberal use of drugs, hookers, and very expensive wine as inducements in the sale of drecky CDOs, combined with pretty good primers on the products themselves). But we’ll put that aside and offer some possibilities.

Smith was simply too junior. Ironically, Goldman had this as a defense in its “toolkit” circulated before the Smith book hit the newsstands.

By e-mail, excerpted from a book in progress, by Michael Thomas, second generation Lehman partner, back in the days when, pound for pound, Lehman had the best investment bankers on the Street:

In no form of human endeavor does history count for as little as in finance. The more I read, however, the more I’m struck by how little top-level insider material there is. Maybe I should make that “how little honest top-level insider material.” There’s a reason for this: Wall Streeters may be exorbitantly well paid for what they do, but ex-Wall Streeters, especially those with first-hand knowledge of the location of the bodies, and super-especially the big hitters who called the shots, who made things happen and denominated their triumphs in nine digits or more, seldom speak for the record – which is how and why they get to keep the money.

If you ask me, what we really need are accounts dictated by the devils in the details, tell-alls that offer Satan’s first-person account of his evil angels’ handiwork. An insider account, for example, of Michael Milken’s Drexel Burnham junk bond daisy chain, preferably by the man himself. Forget it: ain’t going to happen. When Long Term Capital Management (LTCM) went down the tubes (despite its pretentious name, what killed it were short-term problems), John Meriweather didn’t waste time writing the whys and wherefores and certainly not the mea culpas; he didn’t hire a ghostwriter; he went out and raised a new fund, and if this one taps out – one hears not-so-good things about its performance – he’ll doubtless return for a third at-bat. If he had set down a written record of how he pissed away billions, he wouldn’t have a chance in hell of a do-over. But Wall Street is the mother of career reinvention, the working motto of the place is “This time is different” (which old-timers say it never is), so why screw up the possibility of a second or third go-round with a mea culpa or a mea whatever?

The problem is, most Wall Street books written by so-called “insiders” turn out to be by low-level functionaries. The definitive book in this genre, Michael Lewis’ Liar’s Poker, is an account written by a guy who I’m told was perhaps a couple of rungs up from clerk at Salomon Brothers. What we never got was Salomon CEO John Gutfreund’s side of the story. When he got the boot, he kept his mouth shut, took his money and left the firm.