Why I Left Goldman Sachs: A Wall Street Story (19 page)

I remember a period of several weeks when one of my bosses, Paul Conti—a guy who, by title anyway, was a leader—did not seem to be calling clients, was not talking to his employees, did not try anything (as far as I could tell) to pump up the troops. The most impressive thing I saw him do during the crisis was put himself through one of those weeklong juice cleanses that had been trendy among the senior people at Goldman that summer and into the fall.

Most people did it to lose weight. Conti, a weightlifter who went to the gym every day, seemed to be undertaking the program as an act of supreme self-discipline. I remember sitting right behind him when he decided to start his regimen. It was Sunday evening, September 14, and we were all in the office waiting to see if Lehman would go under. I thought,
What kind of hardened motherfucker puts himself through this during the biggest financial crisis since the Great Depression?

Every day for a week—through Lehman, Merrill, AIG, and “breaking the buck”—Conti took delivery of “six 100% organic vegetable and fruit juices” from the BluePrintCleanse company, and every day he dutifully drank all six bottles. He didn’t have one bite of solid food for seven days. This did not help his mood.

Mr. Cleanse was Brooklyn-born and raised, a former college football player, equal parts intensity and passivity. During the crisis, unfortunately, it was the latter quality that surfaced. In retrospect, I can understand that he was scared, but did he think a partner’s only responsibility was collecting big bonuses when times were good? Everyone on the team talked for weeks about how disappointing the partners on the floor were during the darkest days of 2008. Now was the time to step up and show everyone why they made the big bucks, why they had been appointed leaders. Instead, Mr. Cleanse sat frozen at his terminal day after day, anxiously tracking Goldman Sachs’s stock price, which for the partners on the floor correlated significantly to their net worth. His passivity was particularly demoralizing to the junior analysts, kids who had been at Goldman all of three months, and who were really frightened. At one point, a partner from another floor came by and did the best he could to say a few encouraging words.

Smiling, he said, “Come on, guys. I know things are scary. But this is when Goldman Sachs rises to the occasion. The best thing we can do right now is not to retreat, but to stay in front of our clients.” Magic—that’s all that was needed.

This rare show of leadership on the part of a partner was such an isolated incident that people talked about it for days afterward.

The lack of leadership on the floor disappointed me sharply. I had looked up to the institution of the partnership; I had aspired to be a partner one day. I could only hope that, had I been one at the time, I would have acted differently.

With trading slowed to a crawl, Goldman began another of its periodic rounds of firings. Every couple of weeks, more people were let go. One week, the rumor on the trading floor was that one person in every group on the floor would have to be terminated. Mr. Cleanse chose to fire a new associate who had recently joined our group. The associate, in his early thirties, had been trying hard, but at that point, he probably had the fewest client relationships on the desk: he simply wasn’t as valuable as others, in commercial revenue terms. There was nothing to be done about it. As he walked off, an associate named Becky began crying, right in the middle of the trading floor.

This was not a common sight in what was supposed to be a tough environment. You were supposed to suck it up on the trading floor—if you really needed to cry, the unwritten rule said, you went to the bathroom. But especially in the midst of that scary time, it was traumatic to see someone you liked get fired in front of your eyes, to pick up his things and leave the building.

Mr. Cleanse went up to her and said, “Becky, what did you major in at Villanova? Was it emotionalism? Cut it out.” And that was it—the shock of this remark stopped her. That line got talked about a little bit afterward. Mr. Cleanse, it was agreed, had acted like a douche bag. In his defense, he did later help the fired associate find another job, a gesture I was impressed with.

Three subway stories:

1.  One afternoon that October, a managing director named Doug Miller and I had a meeting scheduled with a client in Midtown, a large asset manager with about $200 billion in holdings. The client was very conservative—hence the relative health of the fund—and the topic very straightforward. We were to discuss the basics of a trading product on which the client was a little behind the curve: ETFs, or exchange-traded funds.

ETFs, which were developed decades ago, are essentially souped-up, highly targeted investment funds that trade just like stocks. If you want to get broad exposure to banks, for example, you could buy each individual banking stock (such as Bank of America, Citigroup, Wells Fargo, JPMorgan Chase), or you could buy shares in an ETF with the ticker symbol XLF, which holds shares of all these banks and gives you a composite performance for the banking sector as a whole. While ETFs are not without their fair share of critics because of the outsize market impact they can have, and the disappointing returns versus benchmark they can sometimes show, it felt almost comical to be sitting down to talk about this relatively simple investing strategy in the midst of a crisis caused by ultracomplex derivatives. Maybe black comedy was more what it felt like. Times were tough; Doug and I worried that the clients might be in a bad mood. We briefly considered canceling the meeting.

But then we decided to go. For one thing, it felt like a necessary distraction. Plus, there wasn’t much we could do to fix the turmoil going on around us. Why not go visit a client, stay in front of them, show them that we weren’t holed up in our bunker down in Lower Manhattan?

We decided to take the subway uptown. It was very unusual to use the subway to get to a meeting, especially among managing directors; usually you’d call for a town car. But it was rush hour, the client’s office was near a station for the number 4 train, and Doug was a good guy who didn’t feel the need to put on airs.

The meeting was scheduled for 5:00
P.M.
; we waited for the market to close at 4:15, then hustled out to try to get there on time. Walking out of the office together, we were both a little shell-shocked. Every day that fall, institutions that had existed for a hundred years were disappearing in seconds. The markets weren’t rational. It was a frightening time.

As we got on the packed subway—the two of us were standing, holding on to a pole—I said to Doug, “What do you think?” He was a decade older than me, more experienced, and I was looking for a voice of wisdom about what was going on—especially since Mr. Cleanse, the partner running my group, wasn’t talking to anyone. I also thought Doug might have some insight into what the firm had in mind.

I didn’t get the answer I was looking for.

Instead, Miller stared down the length of the subway car and said, over the roar of the train, “I spent almost my entire day on the phone with my wife, moving our money around.” I instantly knew what he was talking about. The FDIC protects bank deposits up to $250,000: this guy had been opening new bank accounts, trying to make sure none of his savings was exposed to the wild winds howling around the markets: $250K here, $250K there. This was the banker’s version of stocking up on ammo, drinkable water, granola bars, and an inflatable raft to get you west of the Hudson.

“I’m just wondering what’s going to happen if the whole ship goes down,” Doug said. He was talking numbly, still staring, as if he were in a trance. “All these guys in finance making two million a year—where are they going to go? What’s our value to society? What skills have we developed?” He shook his head. “Society doesn’t need us,” he said. “We’ll be lucky if we can find something for eighty grand a year. I’m going to tell my kids to go into the sciences.”

It was surreal. On the one hand, we were on a crowded subway; we had to be careful about what we said. I’m sure Doug was as aware as I that some people around us were half-listening, and that the words
Goldman Sachs
should not be uttered. On the other hand, he was speaking the kind of unfiltered truth you never hear on Wall Street. It really felt like a moment of reckoning, as if the whole industry and the economy were about to die. And in a strange way, our talk on the subway felt like one of those movie scenes where two people are in a plane that’s about to go down, and they can finally say—they
have
to say—what’s really on their minds.

2.  One day not long afterward, Nadine and I had The Talk. We’d now been going out for a long time, and in all fairness, it was time for us to think about staying together for life if we were going to stay together at all.

She initiated the conversation. Nadine is a direct person, and she began directly, at a quiet moment, one night smack in the middle of the crisis, when we were in bed and about to go to sleep. The background was, I think, that she had been advised by some of her friends that when you’re thinking seriously about marrying someone, you need to have a checklist of how they’re going to behave financially: what the plans are, what the goals are. This was where she was coming from. But she began fast. Very fast.

“How will you dress our kids?” she asked me.

This took me by surprise, since what was on my mind was the chaos I had seen in the markets that day.

“I’m not sure,” I said. “I, uh—”

“Would you want the kids to go to private school?” Nadine asked.

“Why are we talking about this now, Nadine?”

“Do you see me working when we’re married?” she asked me.

The cross-examination rubbed me the wrong way. But, in all fairness, the backstory was that she was sensitive to how involved I was in supporting my family financially: paying for my sister’s college education in America, sending money to my parents. I think she was, quite fairly, wondering if that would change if and when we were married. Would my focus be on supporting our family? She clearly wanted to make sure that it would be. What I would always tell her was “Please, God, I’ll be making enough money that this won’t be an issue either way. I’ll be able to do both.” But Nadine was adamant that she didn’t want to work when she had kids. The ironic thing is that I agreed with her. I’ve always felt that whoever was the mother of my children should—at first, anyway—work exclusively at raising the kids. I saw this to be a very special thing that I hoped to be able to provide for my wife and our family. But she wanted an explicit commitment, in no uncertain terms, almost in writing.

I felt put on the spot. So, once more, I said what I’d always said: “Well, it would depend on whether we’re in a financial position where it’s okay for one person not to work.”

The look she gave me said: wrong answer.

I tried to recover and elaborate—I was trying, as Nadine was, to be as honest as possible. “I just want a teammate who is going to support me in the right ways, and I would support her in the right ways,” I said. “That doesn’t mean we both have to be working. It just means we’d both contribute to the relationship.”

Another look. She’d clearly wanted answers that were as concrete as her questions. But the conversation continued, and we came around to the (quite natural) conclusion that, in the midst of wild market irrationality, in the thick of the worst financial crisis since the Great Depression, we were both freaked out about money—not to mention whether I’d have a job next week.

We decided to cut back on restaurants and taxis. (Many Wall Streeters can spend north of $10,000 a year on taxis alone.) Instead of going out to eat two or three nights a week, we said, we would try to do it just once a week. We started cooking more—and Nadine, being a dietitian, cooked very well. We started finding little ways to conserve money. At times we went overboard: penny wise, pound foolish.

On a cold Saturday night in November, my close friend Adam—whom I’d first met when we were summer interns together—had a birthday party at a bar on the Lower East Side. And not the gentrified part of the Lower East Side, but deep in Alphabet City, a good ten- to fifteen-minute walk from the nearest subway stop. (Adam had a great head for numbers, I always told him, but a lousy head for picking party venues.) The party was to begin late, around 11:00
P.M.
Nadine felt too tired to go. My place was on the Upper West Side, at Eighty-First and West End. It would have been the easiest thing in the world to step out of the building and hail a cab, but the fare to First Street and Avenue Z (or wherever the hell the thing was) would’ve been thirty bucks. And when the party was over, at 2:00 or 3:00
A.M.
, who wants to get on the subway then? There goes another thirty.

I decided to kick off our austerity plan and take the subway: the number 1 train to Times Square; the Shuttle crosstown to Grand Central; the 6 train down to Bleecker Street; the F east to Second Avenue. Three transfers. Three long waits. A fifteen-minute walk to the restaurant. The whole thing in reverse to get back home at 2:00
A.M.
, on a very cold night in November.

I saved sixty bucks.

I was making between $400,000 and $500,000 a year.

But who knew if I’d still be making it come January? It could all end any second.

3.  My parents were coming over from South Africa, my father to take his American pharmacy exam, my mother to visit. I had persuaded my father, at the age of fifty-eight, to study for the exam; I was gently but steadily trying to pressure both my parents to come to America and escape the crime of Johannesburg. This was December. They were landing at JFK on a Sunday afternoon, and Nadine and I were going to meet them. Being very grown-up and rational about sticking to our frugal economic plan, we decided to take the Train to the Plane: the subway.

This was no jaunt to the Lower East Side. This was a number 1 train to Columbus Circle, then a transfer to the A train, and then a long, long ride on the A train through Brooklyn and out into Queens, way past Howard Beach, to John F. Kennedy International: an hour and a half in all. We felt virtuous taking the subway. I felt a little more ambivalent when we met my mom and dad, who’d just gotten off a twenty-hour flight from Johannesburg. My father had two huge suitcases full of heavy textbooks to study for his exam. Surely we could take a cab from Kennedy to the Holiday Inn in Brooklyn where the pharmacy chain administering the exam required candidates to stay?