Cohen in control
Last month The Lawyer popped down to Manhattan’s financial district to see Sullivan & Cromwell’s Rodge Cohen, the man who saved the US banking system.
OK, that might be over-egging it a touch, but probably not by much. Arguably Cohen did more than any other lawyer to help avert a full-scale financial meltdown one year ago. What’s his take on how the world looks now?
“Well, I guess the best way to put it is 12 months ago we were looking down a true financial abyss,” says Cohen. “It was clearly the case [on 15 September] and it was clearly the case almost every weekend for six-to-eight weeks. Today, if you continue the metaphor, we’ve taken a number of steps back but we haven’t climbed off the cliff.”
Cohen says he is “somewhat of an outlier” because the popular press seems to be of the opinion that nothing really has changed, pointing to stories about the return of the big bonus as proof.
“That I find inconsistent with my own observations,” Cohen adds. “Obviously there have been fundamental changes. Major companies have failed or been merged out of existence. But for those that remain there’s a far greater recognition of the risks in the system and a far greater recognition of some of the flaws in the system, which were deep-seated.”
According to Cohen, the executives of the world’s top financial institutions are now acting accordingly.
“You can’t have lived through last year without having learned a lesson,” he adds.
Agree with Cohen? Have your say here. And for more on this story, see The Lawyer next Monday.
Readers' comments (1)
Rob | 6-Oct-2009 3:44 pm
Disagree. The only real change is that implicit government (taxpayer) guarantees have become explicit, and the "system" has enshrined the Too-Big-To-Fail doctrine. The finance sector expands under state subidies and lax monetary policy, QE and zero rates. And the real economy shrinks. The remaining broker-dealers have been allowed to game the system and have become BHCs. Regulatory changes have been trivial to date. US leadership is facing a serious test and so far is failing. A much more radical approach will be needed within a few years as in 1937-38.
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