The Greg Smith vs. Goldman Sachs Death Match Is On

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We've learned some things this week about Greg Smith's book, Why I Left Goldman Sachs, which comes out on Monday. (As does my interview with Smith, which will be in next week's magazine.)

We now know, thanks to various leaked copies of the book, that Smith once saw Goldman CEO Lloyd Blankfein "air-drying" in the Goldman gym, that Smith's ping-pong prowess gave him a leg up in client negotiations, and that Goldman Sachs traders get very upset when interns bring them cheddar-cheese salads for lunch.

We've also learned, by watching the bank's ad hominem counterattacks on Smith, that Goldman Sachs isn't above playing dirty when it feels threatened.

For many years, Goldman had a hands-off approach to publicity. Its first-ever spokesman, Ed Novotny, had a blanket "no comment" rule and rarely responded to critics. To do so was considered beneath the Firm. That basic attitude continued under the reign of Lucas Van Praag, the former Goldman PR chief who was unseated early this year.

These days, though, the bank's PR team — led by former Treasury flack Jake Siewert — has morphed into a rapid-response attack squad. Siewert, whose first week on the job coincided with Smith's op-ed, has been waging an all-out preemptive strike on Smith, the likes of which Wall Street has rarely seen.

It began last month, when Goldman spokesman David Wells issued an amazingly bitchy comment about the firm's nonchalance toward Smith's book:

“Every day, some young professional, after a decade in a postcollegiate job, reassesses his or her career and decides to move on and do something else,” he said in an e-mailed statement. “Others can better judge whether Mr. Smith’s particular career transition is of unique interest.”

But behind that seeming nonchalance was real, genuine panic. And in the ensuing weeks, as Smith's publication date neared, Goldman did its best to portray Smith as a disgruntled twerp and take some of the sting out of his allegations. The bank leaked his year-end reviews (which purportedly show that he asked for a $1 million bonus and was disappointed when it didn't come), and gave off-the-record briefings to various media outlets about Smith's lackluster performance at the bank. When Goldman actually did get a copy of the book, a spokesman told the New York Times that he was "relieved" that Smith didn't expose anything truly damning. 

Never mind how odd that sentiment is. (It implies that there are truly damning things to be found at Goldman, just not ones Smith was privy to.) What's remarkable is the extent to which Goldman — a firm once known for its gentleman's discretion — is waging open war on a former member of its staff, even going so far as to leak confidential internal documents about his performance.

"The firm never would have countenanced this kind of thing several years ago," one veteran Wall Street PR maven said of Siewert's counterattack. Going after Smith is overkill, the PR veteran said, "like using Agent Orange every time there’s a minor incursion."

Goldman's Agent Orange strategy seems to be working, though, insofar as it's re-centering the pre-publication media narrative on Smith's credibility, rather than Smith's claims about how Goldman treats its clients. Bill Cohan, whose book Money and Power is the definitive guide to Goldman's cultural history, wrote in Bloomberg yesterday that Smith was "nothing more than a sweet-talking con man." CNBC anchor and Times columnist Andrew Ross Sorkin echoed Cohan's words this morning, saying, "I feel in a way that he might have conned The New York Times a little bit for running the op-ed."

Smith, who hasn't responded to the new criticisms so far, will likely get a kinder reception next week on general-audience TV shows like 60 Minutes and Piers Morgan Tonight, where interviewers will be less predisposed to take Goldman's side. If what I saw of him this week is any indication, he's quite a thoughtful guy, and his arguments about Goldman's cultural decline are compelling if not entirely original. I tend to agree with Felix Salmon, who suspects that while some revisionism may be at work with Smith's book, he's not a cynical fraud pushing a made-up narrative.

So while it can't be pleasant to see his internal reviews plastered in newspapers, Smith should be glad that Goldman is attacking him so vigorously. Smith's publisher, too, should celebrate the newfound aggression of Siewert & Co. Every time Goldman treats Smith as a critic deserving of a harsh response, I imagine another few copies of Why I Left Goldman Sachs make their way into Amazon shopping carts. If anything, the attacks actually serve as ipso facto proof of one of his central claims — that Goldman has morphed from a gentleman's investment bank into a cutthroat, single-minded juggernaut obsessed with winning at all costs.

Update: Goldman Sachs shoots another incredibly passive-aggressive salvo at Smith (whom they won't even deign to name) on Twitter:

Update 2: Goldman has sent out a "Briefing Toolkit" to all employees to equip them for awkward conversations about Greg Smith. The full memo is here.