Wall Street’s Lawyer: H. Rodgin Cohen

Before stepping down last year as chairman of law firm Sullivan & Cromwell, H. Rodgin Cohen was involved in almost every key negotiation regarding the future of Wall Street.


No one has the ear of Wall Street’s senior executives like H. Rodgin (Rodge) Cohen. The senior chairman of law firm Sullivan & Cromwell has advised arguably every major banking institution on the Street. At the height of the recent global financial crisis, the attorney, who’s calm yet assertive, was involved in almost every key negotiation regarding the future of Wall Street, including advising Goldman, Sachs & Co. on becoming a bank holding company and then last November instructing the New York–based middle market lender CIT Group as it filed for bankruptcy protection.

Cohen, 65, has seen a lot, especially during the past tumultuous two years. He was at the table when the U.S. government was trying to strike a plan on how to bail out failed mortgage lenders Fannie Mae and Freddie Mac. Cohen was also an adviser to Lehman Brothers as it began reeling toward collapse and helped the company as it discussed a potential deal with Barclays, only to have the U.K. government refuse to back that merger. At the end of last year, he stepped down from his role as chairman of the white-shoe New York law firm, affording him some time to sit down with Institutional Investor Staff Writer Imogen Rose-Smith to discuss the ongoing fallout of the Great Recession.

1. How would you rate the government’s handling of the banking crisis?

On a scale of one to ten, with ten being the highest, I would say nine. Letting Lehman Brothers go was a major mistake because the entire financial system was almost immediately plunged into chaos. Massive government support programs throughout the world were required to prevent a financial collapse. But the actions taken by the government in 2008 and 2009 probably prevented another Great Depression.

2. Currently, there is little to prevent the banks from getting into the same situation all over again, even with the higher capital ratios required of commercial banks.

That is why we need legislation. We need tighter and more focused controls in place, but not anaconda regulation that squeezes the life out of an institution. It’s always a balancing act.


3. Do you think President Barack Obama’s proposals will achieve that balance?

At this point all we have are the broad contours. Until more white space is filled in, the consequences cannot be analyzed.

4. You were advising banks going into this crisis as well as coming out of it. What deals do you regret?

The transaction I worked on which I wished had never occurred was Wachovia Corp.’s acquisition of [Oakland, California–based lender] Golden West Financial Corp. That was a very unfortunate deal. Wachovia was a bank that tended to be quite conservative; they walked away from a number of deals. Golden West had an absolute pristine record — but it had changed its lending practices, and that was not anticipated. Wachovia made just one bad acquisition, but that led to its demise.

5. The smaller banks across the country now appear to be bearing the brunt of the financial crisis fallout. What is the prognosis for them?

There are two ways that small banks can be acquired — the undesirable way and the desirable way. The undesirable way is for them to fail and then be acquired. The desirable way is for banks to be acquired before they fail. The way the tax code is currently structured, it makes more financial sense for an acquirer to buy a bank out of receivership. It is not a coincidence that Wells Fargo’s decision to buy Wachovia and PNC Financial Services Group’s decision to buy National City Corp. came during the 30-day window on that rule opened by the Treasury Department.