Rodgin Cohen is a name that is unfamiliar to most people who can instantly identify many of the key players in the financial sector and the government’s moves to prop up failed or failing firms. But Cohen, the head of the white-shoe law firm Sullivan and Cromwell, has been at the centre of many of the bailouts and mergers that have transformed Wall Street.
American Lawyer has a lengthy profile of the guy who is probably the #1 dealmaker in the banking bailouts. His office sits at the tip of Manhattan, just across the street from Goldman Sachs. At one point it was rumoured that Cohen’s office actually had an internal Goldman phone number.
Here’s a sample of the clients and deals Cohen has worked on.
Bear Stearns. Cohen not only represented Bear Stearns in its appeal to the government for a bailout. He actually was the guy who called Tim Geithner to appeal for last minute government aid. He also was the lead negotiator for Bear in the sale to JP Morgan Chase, and then did it all over again as that deal was renegotiated.
Fannie Mae. When the government moved to put Fannie into conservatorship, Fannie relied on Cohen to represent it in the negotiations.
Goldman. He represented The Goldman Sachs Group Inc. when it converted to a bank holding company and registered with New York State, defying the pattern of competitors who registered as federal institutions.
Wachovia. You probably remember that Wachovia first agreed to a deal with Citigroup, only to turn around later and strike a better deal to be acquired by Well’s Fargo. Cohen was the lawyer who urged Wachovia to take the deal with Wells.
Lehman. He represented Lehman Brothers, sitting in the room at the New York Fed during that crucial weekend preceding Lehman’s bankruptcy. After bankruptcy was declared, Cohen wound up switching sides, representing Barclays Bank when it acquired Lehman’s brokerage.
AIG. He helped American International Group secure an $85 billion bailout from the Federal Reserve.
So what does the guy who was at the centre of the storm think now? Here’s the American Lawyer’s version:
He thinks that injecting capital into the banks is necessary as part of a broader rescue plan, but that capital injections alone are never going to spur lending. He describes the Troubled Assets Relief Program (TARP) as “bad packaging” that exhibits “unrealistic expectations by the sponsors of the program.” The banks, he says, have used the money to slow their deleveraging rather than to lend (the banks, meanwhile, say that lending is picking up). Cohen supports increased funding for the Federal Reserve’s Term Asset-Backed Securities Loan Facility (TALF), which lends money to investors who then use the money to buy securities backed by consumer loans. (The goal is to liquefy the markets for consumer debt. Geithner, now Treasury secretary, recently said he will increase funding from $200 billion to $1 trillion.) Cohen also thinks that federal authorities should take a page from the Great Depression, when the government evaluated the health of the nation’s banks and made capital injections into all of those deemed healthy enough to survive. He also is strongly in favour of the bailout for mortgage foreclosures. “Until we arrest the decline in the housing market, we are never going to come out of this,” Cohen says.
These are grim times, but Cohen, a Democrat, trusts President Barack Obama’s economic appointees to ease the country out of the recession. He describes Geithner and Lawrence Summers, Obama’s chief economic adviser, as “extremely capable people.” They understand “the importance of comprehensive solutions, vast solutions,” he says.
He’s worried, but he also has hope. “As pessimistic as I have been for two years now, I think the odds favour considerably that we will come out of this,” he says.
These are relatively conventional views. Cohen’s support for Geithner ans Summers is hardly surprising. Until two weeks ago, Cohen was considered likely to become deputy U.S. Treasury Secretary. He withdrew for unknown reasons. Many people say that the close scrunity Geithner’s tax problems got may have deterred Cohen from taking the spot. It’s not so much because anyone thinks Cohen had similar tax issues. He’s regarded as a real straight arrow. But the rough treatment of Geithner may have made Cohen wary, particularly given his representation of the villain of the moment, AIG.
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