Why I Left Goldman Sachs: A Wall Street Story by Greg Smith

Author:Greg Smith
Language: eng
Format: mobi, epub, pdf
Tags: Non-Fiction, Azizex666, Business
ISBN: 9781455527489
Publisher: Business Plus
Published: 2012-10-22T04:00:00+00:00

CHAPTER 7

Looking into the Abyss

Out of the corner of my eye I saw Lloyd Blankfein, the CEO of the company, walking toward my group, Derivatives Sales, with a throng of people. They were on the other side of the football field–size trading floor, but steadily moving in our direction. A couple of photographers and someone with a video camera were walking along with them. This was a strange sight. You never saw photographers on the trading floor, especially not during what felt like financial Armageddon. The markets were melting down, and Lloyd was smiling from ear to ear, as was everyone in the crowd. Then I saw that the group moving closer to my desk was full of bigwigs: the global head of the Securities division, Harvey Schwartz; the head of North American sales, Enrico Gaglioti. There must have been seven or eight partners, but none of these bigwigs was as big as the man they were walking with.

The Oracle of Omaha, Warren Buffett. Indisputably the greatest investing mind of his time, and possibly of all time. His Berkshire Hathaway had become legendary in its ability to see value and generate returns for its investors year after year after year.

This was a good day for Goldman Sachs amid a storm of bad ones: Warren Buffett had come to save the firm from extinction. We were all taken by complete surprise: only two days after we had converted ourselves into a bank holding company, Buffett had extended us a lifeline, in the form of a capital injection of $5 billion. It was an incredibly attractive deal for him, one he couldn’t refuse. He would receive a 10 percent annual dividend—Goldman Sachs would pay him an extra $500 million a year above and beyond his investment—plus he had the right to buy $5 billion of additional stock in the firm at a discounted price in the future, through warrants (similar to call options) the firm had granted him. An expensive deal for Goldman, but the stamp of approval of Warren Buffett was like gold. It also gave us momentum quickly to go out and raise an additional $5 billion in capital from our clients, some of the biggest institutional investors in the world. What was more important than the Oracle’s $5 billion investment was the powerful shot of confidence it gave us, and the message it sent to the market: both the money and the gesture had made us more stable.

As the group headed down the long row that ran down the middle of the trading floor, Warren looked around, smiling; Lloyd was pointing things out to him. Then they decided to stop—directly by my desk.

“Lloyd, let me say a few words,” Buffett said.

An associate quickly scrambled and got Buffett connected to the handset at the desk directly next to mine, so he could speak over the Hoot, reaching each and every one of the six hundred traders on the floor.

The moment Buffett started talking, applause erupted. It was the kind of

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