I just got my hands on this book and finished reading within a day, it was a very pleasurable short reading of Greg Smith’s career at GS. The book actually gave me a better impression of the investment banking sector rather than the intended purpose. I suppose I was too negatively reflected upon these institutions through highly subjective media, be them mainstream or niche. The entire 10 out of 11 chapters were talking how upright things had been for GS; its corporate culture, moral ethics, and people. I had a complete paradigm shift about investment banking because I have not heard of so many goods things about them. I felt naïve being indoctrinated by those banker bashing media on the Internet. Investment banking was a business of integrity, but when things experienced their greatest historic advances, quality had to be sacrificed for maintaining past growth momentum. Investment banking was over long ago when Hank Paulson quit as the CEO of GS in 2006.
This is why I feel so sorry for those recent graduates who would die to work for an investment bank. I especially pity those nice, follow-the-rules type of overachievers at school. (I wouldn’t care less about those lacking moral fibre and just wanted to get rich quick therefore going to work for an IB.) They would put their heart and soul into finding an IB to work there, only to realise things have changed against their favour. Well I guess it would mean a few years of wasted prime time, but by no means the end of ones career.
Greg Smith then outlines what a quality business model is built upon:
“I believe in a business model that is long-term-oriented, where there is an intrinsic fiduciary responsibility to do right by your clients so they will keep coming back to you. Not only is it the right thing to do, but it is also better for business. You will make just as much money—but you will make it more slowly and steadily and transparently. This should be good for shareholders, too, who like a predictable revenue stream and a steadier book of business. Today’s take-the-money-and-run model is just not responsible, or sustainable.”
With my own emphasis, this is the line that struck my heart, which pretty much summarised what I am doing right now.
Smith pretty much nailed the crux of the book at the ending paragraph; perfectly executed.
“People know that there is something deeply wrong with the system, but very few can put their finger on what the problem is. After the crash in 1929, the U.S. Senate conducted the Pecora Hearings, to investigate the causes of the crash. This inquiry led to real reforms that held banks accountable and eliminated the abusive practices that had caused the stock market crash. This was followed by decades of calm in the financial system. If I achieve one thing with this book, I hope it will be to empower some people with enough understanding to call their congressman, congresswoman, or senator and ask this question: Why don’t you have the guts to do the same thing?”
Before I read the book, I thought it was just another Wall Street banker who wanted to get famous for getting his sack. After reading, his argument seems convincing, all in all, he seems like a genuine guy who wants to change the world for the better.