Let me start by acknowledging the outstanding job National Economic Council Director Gary Cohn’s team has done swaying the media into thinking Armageddon would occur if he left the White House.
I get that Cohn was a respected trader on Wall Street at Goldman Sachs. However, Goldman generally mints exceptional talent. To think there is no one else who can steer this economy is sheer folly.
There are numerous talents who come out of Goldman, Morgan Stanley, Bank of America and JPMorgan who would be very well-suited to run the National Economic Council or the Federal Reserve. So if it turns out Cohn exits the administration, or does not get the nod to run the Fed, there will be no apocalypse.
The recent checkered past of Wall Street — and Goldman Sachs in particular — seems to be moving down to Pennsylvania Avenue.
Jon Corzine was a legendary trader and a co-CEO at Goldman, plus a US senator and a governor.
Corzine was reportedly in the running to be President Barack Obama’s Treasury secretary. That’s the same Jon Corzine who as MF Global’s new CEO leveraged up the balance sheet into such an out-of-control mess that, to put it kindly, it blew up.
Former Goldman CEO Robert Rubin — revered by many, but blamed by more — was President Bill Clinton’s Treasury chief and sowed the seeds for the Great Recession by gutting the Glass-Steagall Act, which helped bring on the mortgage crisis in 2008.
John Meriwether also comes to mind. Meriwether was vice chairman of Salomon Brothers and ran its legendary fixed income arbitrage desk, only to leave and found Long Term Capital Management — where he almost brought down the global financial markets in 1998 after only four years in business.
On the other hand, Hank Paulson, Corzine’s co-CEO at Goldman, was an outstanding Treasury secretary who worked across the aisle during the crisis and guided Ben Bernanke to save the modern financial world.
In virtually all cases, it is the strength of the team at Goldman Sachs and other prominent Wall Street firms that makes the man, not the man who makes the team.
So how did Cohn get to this position?
In 1994, shortly after being promoted to the esteemed partner level, he made a choice. Unable to juggle both managing and trading, he decided to strictly manage, and rose up the ranks to chief operating officer — the No. 2 job at Goldman.
He’s a successful guy who — and I love this about Goldman — didn’t come out of the cookie-cutter, Ivy League, silver spoon mold.
In fact, he grew up in working-class Ohio and suffered from dyslexia — something I know well as my mother spent a lifetime teaching kids with learning disabilities — and graduated from American University.
Not a small feat for a dyslexic kid to graduate from college and go on to become the No. 2 at Goldman Sachs. All that being said, his over-hyped abilities and value to the administration are unwarranted, and much of it is merely mainstream media spin because he is a Democrat.
I’m not even sure if Cohn’s temperament is well-suited to Washington. Even his old Goldman Sachs boss, Lloyd Blankfein, took a poke at him last week, referring to him as someone who “doesn’t read a lot of policy papers” and saying of his old colleague, “No one’s perfect,” all while offering that he would do a “great job” as Fed chair.
That’s a left-handed endorsement, if Blankfein’s words are to be interpreted at face value.
If you look carefully, it really depends on how much Janet Yellen embraces President Trump’s rollback of the excessively restrictive parts of the Dodd-Frank Act to determine if there will even be a Fed chair seat to fill.
So whatever fate befalls Cohn, the republic will still stand. As did the markets, which had a ho-hum reaction last week to the news he wasn’t being considered for Fed chief due to his criticism of the president’s Charlottesville comments.