Why I Left Goldman Sachs: A Wall Street Story (22 page)

Right about this time, I was experiencing some volatility in my personal life. On March 15, 2009, the equity market hit rock bottom, its lowest point in the crisis. Coincidentally, that was also the day that my three-year relationship with Nadine hit rock bottom. We broke up. I had felt it coming for a while, and increasingly knew in my heart that we probably were not meant to be together in the long run. We were very good at having fun together, at laughing together, and enjoying each other’s company; we shared the same Jewish background, and it seemed that it should have been right. But it wasn’t. We just kept on disagreeing on too many important things and could never find middle ground on anything. It was wearing us both down.

That doesn’t mean we hadn’t been talking a lot, though. As the financial crisis deepened, so did our respective concerns about the future. I worried about my career, my livelihood, and how our relationship would work out. Nadine worried about whether I was husband material. She was thirty; she felt it was time for her to settle down. With increasing frequency during the dark early months of the year, she asked me whether I was thinking along the same lines.

The selfish part of me, the part that needed someone to hold onto while the world was coming apart, would have liked for us to continue as we had been. But she kept asking—and she was right to do so—where we were going with this. I finally had to tell her that I didn’t see us getting married, and that was that. It is an unfair thing in life that something can be so good and so much fun, but just not the thing for you, and you have to let it go.

It was the worst possible timing—or at least it seemed so then. Between my business life and my emotional life, things were in turmoil. I had put on weight, I was eating terribly, and hadn’t been to the gym all year. The thing that helped me most in those subsequent months was a healthy routine: I started exercising almost every day (running; not Zumba), cut out all alcohol for weeks, and stopped eating all the beef lo-mein and pastrami sandwiches that had become the staples of my diet while I was glued to my desk during the crisis. An older salesman had years earlier dispensed some great advice to our team: Eat Light, Feel Right. Slowly, I started to feel right.

David Viniar, the chief financial officer of Goldman Sachs, is an extraordinarily impressive guy—the guy who, every quarter, when Goldman releases its earnings, is the public face of the firm. Tall and thin, a Bronx native, he went to Union College and then Harvard Business School and has been at the firm for thirty-two years. Periodically, he gets on a conference call with all the business journalists and research analysts and opens himself up to interrogation. He has to be able to answer any question—has to have all the numbers in his head and at hand, but also has to be careful not to put his foot in his mouth, not to incriminate himself, not to say anything stupid.

This is a process that, as you can imagine, can potentially go very wrong—if you’re not Viniar. Lehman Brothers had had a CFO named Erin Callan—charismatic, polished, and attractive—whose badly botched conference call with a hedge fund manager named David Einhorn only firmed Einhorn’s resolve to short Lehman stock and escalate broader rumblings that the firm was in trouble.

On March 19, 2009, David Viniar held a two-hour conference call with journalists and research analysts to explain the firm’s involvement in the government bailout of AIG. I listened in; everybody at Goldman did. It was a masterful performance under extraordinarily difficult circumstances. As the experts peppered Viniar with questions, he succeeded in making a two-pronged, essentially self-contradictory argument: that Goldman Sachs, which was owed billions of dollars related to credit-default swaps with AIG, had hedged itself to such a degree that we would have been just fine if AIG had gone bankrupt—but also that Goldman had been completely justified in accepting $12.9 billion, a hundred cents on the dollar, in AIG’s bailout money. You see, AIG had insured Goldman’s mortgage securities, and when the mortgage market crashed, Goldman wanted to get its insurance money—even though we were shorting the market. The firm had doubled down on the collapse, and like any policy holder, we wanted our money.

People within the firm and on Wall Street say Viniar is the best CFO in the world. I’ve often thought that if I had to send someone into the arena for me, David Viniar would be right at the top of the list. He has a ploy that he’s famous for, the verbal equivalent of Gary Cohn’s in-your-face, foot-on-the-desk move: when some research analyst asks him a tough question—“David, do you think these numbers and those numbers equate to four billion dollars?”—Viniar will just give a one-word answer: “No.” Or, “Yes.” Or, if he feels like being more exact: “Actually, it’s three point eight billion dollars.” No further elaboration.

A deep silence follows. Then the same thing always happens: the poor analyst gets so flustered with the silence and lack of detailed response, that he eventually thanks Viniar. To which Viniar always gives the same two-word response: “You’re welcome.” Which a lot of people at Goldman consider corporate-speak for “Fuck you.” Viniar has given the guy nothing; now he’s telling him to go fuck himself. Anytime Viniar did a conference call, I dialed in. The guy was a gladiator.

Everybody on the trading floor had listened in, enraptured, to this particular conference call: Goldman was still struggling for its life, and this was the man we’d sent into battle to fight our fight. Wartime Britons hearing Winston Churchill must have felt much the same way. And I’m sure everyone else felt the same triumph I felt at Viniar’s ability to tackle these insanely complex questions calmly and cogently. In the heat of the crisis, the instinct of every Goldman employee was still to defend the firm.

But a funny thing happened: as time passed, Viniar’s argument began to emit a certain odor, and it wasn’t the fragrance of roses, freshly baked bread, or crisp hundred-dollar bills. It was the distinct odor of conflict of interest. The CFO’s contention that taxpayers would’ve been hurt if Goldman Sachs had taken less than a hundred cents on the dollar for AIG’s debt sounded less and less convincing as 2009 ran its remarkable course.

From their nadir on March 15 (also known in my world as Nadine Break-Up Day), the markets would climb smoothly and steadily, with few hitches, until year’s end. It was crazy. The market commentary I had written a few months earlier about dry powder coming back was proving true. In retrospect, I should have headed directly to Atlantic City, since clearly I had found some luck in my prediction.

At first, nobody could see it happening: things continued to look bleak. But every day, there were little signs of improvement, and soon it became clear that the change was for real. It took many people by surprise. And this was not Mom and Pop deciding, “Let’s get back into the stock market.” These were the vast cash reserves that the big funds had amassed in the sell-off slowly making their way back into the market, week after week, as spring turned to summer and summer to fall.

Instead of going to Atlantic City, the manager at one of my biggest clients told me that they had actually acted on my prediction early, as the train was leaving the station, profiting with some very big and well-timed trades. A senior partner, and one of the global heads of trading, came by my desk and told me he had used my commentary in his recent presentation to the firm-wide risk management committee. All this was nice for my ego. I should have been breathing more easily. (After all, my waistband was looser.) The problem was that my fans in upper management and my clients had more knowledge of the work I was doing than my direct managers, who were sitting a few seats away from me.

In early spring, before the recovery was evident, one of my bosses, Beth Hovan, the partner who was cohead (along with Paul Conti, Mr. Cleanse) of my group, called me in for a meeting. Beth was dark-haired, attractive, very smart, and, like most who had ascended to management at Goldman Sachs, very tough. With her, though, the toughness included a certain callousness. (“Let’s be honest about the reason we’re all here—it’s to make a lot of money,” she told me once.) She also struck me as an example of someone who managed up, meaning that she often seemed unaware of what was going on beneath her. When I walked into her office, she looked concerned. “So how are things going?” she said. “I notice the clients aren’t really paying the firm a lot.”

I admitted that business had been declining because clients were panicked and frozen. “But,” I said, “I’ve been trying to add some value for the clients, and bring more people to the franchise by writing these pieces.” She seemed to have only the dimmest understanding of what I was talking about. “Oh yeah, I’ve heard something about those,” she said, vaguely. “Why don’t you reforward them to me.” Her tone said it was all the same to her whether I sent them to her or not. Adding value for clients seemed to be the last thing on her mind.

In the fall of 2009, Goldman finished erecting a magnificent monument to itself: a gleaming, $2 billion, forty-three-story glass-and-steel headquarters at 200 West Street, just a stone’s throw northwest from the World Trade Center site. The building was also right across the way from my old place at 41 River Terrace. Back in my days as a young analyst, my roommates and I used to go to the movies at the West Street multiplex, which had a smallish parking lot next door. Goldman Sachs had somehow managed to shoehorn this gigantic new tower into that little parking lot space. Amazing what a couple of billion can do for you.

Construction had begun in 2005, when the recession was ending and times were flush again—and Goldman had an incentive from the U.S. government: for spearheading the revitalization of the area, the firm was issued $1 billion in Liberty Bonds, a tax-free bond program that provided below-market financing. Goldman was making a bold statement by setting up shop right across the street from where the World Trade Center once stood.

The building was significant in many ways. For one thing, Goldman had never built or owned a structure before; previously, the firm had leased buildings and rental space. The very fact of the new headquarters, not to mention its sheer in-your-face splendor, ran directly counter to the understated ethos of the old Goldman Sachs. (The one understated tradition that did remain was that the firm did not put its name on the door. It just said “200 West Street”). To temper the ostentation somewhat, architects Pei Cobb Freed and Partners had designed the tower on state-of-the-art, environmentally “green” principles, with features such as an ice-cooled under-floor air-circulation system. But to underline the ostentation, Goldman had paid abstract artist Julie Mehretu $5 million to paint an eighty-by-twenty-three-foot mural for the lobby. The swooping lines and stretched geometrical forms flying over the huge painting’s surface were meant to suggest, in an abstract way, the history of finance capitalism. The sheer size of the mural certainly suggested the mighty wealth of Goldman Sachs.

The building’s first seven stories were occupied by gigantic trading floors, each larger than a football field, and significantly bigger than the fiftieth floor at One New York Plaza. (The Derivatives desk, along with the rest of the six-hundred-person Equities Sales and Trading division, was on the fourth floor.) Above were Goldman’s executive offices, Research division, and Investment Banking division. On the tenth and eleventh floors, under a beautiful high glass ceiling, were a 54,000-square-foot gym and an enormous new cafeteria. There was a lot of excitement and pride within the firm about the new headquarters.

And the place to get the latest information on when we would be moving in was Salvatore’s Barber Shop in the basement of One New York Plaza. A significant proportion of the guys on our trading floor used to go down for a quick “wig adjustment” and a hot towel after the market closed. A lot of honchos and power players also used to go there, including Hank Paulson and Duncan Niederauer, former Goldman partner and then CEO of the NYSE. I was once having a haircut and then–New York Attorney General Andrew Cuomo pulled into the chair next to mine for a snip. As October turned to November, my barber, Mike, was tracking the move-in date closely. “Mr. Cohn was in here yesterday, and he said two weeks,” he’d tell me. Or, “Harvey Schwartz [cohead of Global Securities] said no later than Thanksgiving.”

Much of the anticipation about the move centered on the new cafeteria. The cafeteria on the forty-third floor of One New York Plaza had been, to put it mildly, uninspiring if not outright unappetizing. The new facility, with its high, glorious ceiling and sparkling fixtures, looked like a cathedral by comparison.

From the moment we moved in, however—the Equities division, the guinea pigs, moved over just after Thanksgiving—we realized that something was terribly wrong with the new cafeteria. Maybe it was poor management; maybe it was bad feng shui, but the place turned out to be absolute chaos. There was some flaw in the design or layout that no one could ever quite figure out. People were constantly running into each other, literally knocking each other over. There were frequently multiple lines at the grill, salad, sandwich, and omelet stations. There were always long lines to check out. It was all very strange. Clearly, no expense had been spared on the facility; the space was tremendous. Crowds formed anyway. Things got so bad that, at one point, Human Resources sent out an e-mail saying that anyone who came for lunch between 11:00 and 11:30
A.M.
or between 2:00
P.M.
and 2:30 would receive a 25 percent discount. (Believe it or not, there were a couple of managing directors, earning $1 million-plus a year, who were always very eager to take advantage of these savings.) This same e-mail also encouraged people to use the “external” options (aka takeout) in the World Financial Center, so as to reduce crowding and chaos in the Goldman cafeteria. The firm never seemed able to fix this problem.

Some employees seemed to relish the Early Bird Special. Indeed, one of my colleagues got in the habit of lunching at 11:15
A.M.
every day, but he was also the sort of managing director who once took a client skiing, bought a ChapStick at the bottom of the mountain, and then put in a one-dollar expense report to cover the cost of the lip balm. This parsimonious behavior did not go unnoticed by our boss, who upon seeing the one-dollar expense report, started berating the fellow.