Cohen would be a fantastic choice for any top government position, and Treasury would be lucky to have him. Few people in the world have a deeper understanding of the global financial system than Cohen.
In today's political environment though, I have a hard time believing that Cohen could get confirmed by the Senate without a bruising political fight. He was heavily involved in the events of last September. He represented Lehman during the weekend negotiations before it filed for bankruptcy, then a few days later represented Barclays in its acquisition of Lehman's U.S. investment banking unit. He also represented Wachovia (his longtime client) in the Citi/Wells Fargo debacle, and presumably advised Wachovia's board of directors that its fiduciary duty required it to accept Wells Fargo's offer, even though that meant violating its exclusivity agreement with Citi. I'm sure Cohen has represented other Wall Street financial houses at various points in the financial crisis as well.
Perhaps we should just give up entirely on the idea of putting someone who, like, knows something about the financial system, in charge of the financial system. Is Dr. Phil available? Sure, he may not know much about banking, but he's very popular, and people like to watch him bossing other people around.
Good point Megan.
I hear Bernie Madoff's looking for a new line of work. Why don't we trust him with with the keys to the treasury?
Experience? Obama? Comeptence? Perish the thought!
Don't you know, Jon Stewart made fun of Bush and loves Obama. Bush is Hitler! Obama is The Messiah! He don't need no stinking experience!
Perhaps we should just give up entirely on the idea of putting someone who, like, knows something about the financial system, in charge of the financial system.
Close. Or perhaps we should just give up entirely on the idea of putting anyone "in charge of the financial system" at all. Perhaps central planners pretending to know the "right" price for capital is a big part of the problem?
Given their record, perhaps we should? To what extent is their expertise like that of the WWI generals who fed the trench warfare meatgrinder for years?
Granted, the solution wasn't to put people without military experience in charge. But it also mostly wasn't to keep the same experts in charge in the hopes of somehow eventually getting a different result. Finding people who know enough to be useful but who aren't just going to repeat the same mistakes (or make new mistakes based on the same systemic problems that caused the old ones) is a difficult trick.
(And I, at least, am rapidly losing concern about the consequences should some of the old warhorses find their new circumstances insufficiently rewarding and go off to do something with better bonuses. If there's really something in this economy with better bonuses that people with that skillset can do, maybe it would be better for the economy if they were doing it.)
Agree with Mike_S.: You simply can't hand leadership over the very folks whose cluelessness caused this, and the fact that they "know about finance" is irrelevant. If you can mess up this badly, and make assumptions this wrong, that *means* you don't know about finance.
Suggestions:
-Put Taleb of Black Swan fame in charge. Tell him to put up or shut up.
-Dr. Phil might not actually be a bad idea. His advice for relationship is exactly what we need here. I don't watch him much, but his advice is basically of the form, "Get real! Notice [obvious facts {X, Y, Z}], be honest with yourself and how you've been asleep at the wheel, and take the painful steps you need to take care of the mess you've gotten into."
What better advice does the financial system need right now?
Oh, and a massive decoupling of the financial system might be nice too.
The title of this post was the true slogan of the Obama campaign.
That, and "I hate America, blacks are better than whites, all babies must die, and blowing up civilians because you're liberal is a good thing."
There are plenty of people with financial knowledge and direct experience with markets. However there is virtually nobody in the world who has not worked directly for and with the crashing behemoths in the last decade or so who has the slightest bit of social standing with our political or financial elites. Well nobody is too sweeping, take a Stieglitz for instance.
A nobody, an unknown among the players it is assumed would simply be unable to do the job. Wouldn't have the Rolodex at the ready. Be able to talk mano o mano to the Goldman Sachs boys about business or the kids. An outsider in the culture it is assumed could simply not do the job. They don't have the 'experience'.
Let's face it, when Marie says experience, she means it in the social sense. Either your in and of the elites, or your nobody.
The financial crisis is intimately entwined with a political crisis. The old blood must be moved out and a few heads must roll.
Yves Smith seems to feel that Cohen has his head as far up Goldman's ass as possible and can't be expected to do anything other than further entrenched interests.
http://www.nakedcapitalism.com/2009/03/banana-republic-watch-rodgin-cohen.html
Megan means something much more than mere social standing. Cohen has a great deal of experience in the everyday functioning of the banking system, in addition to a comprehensive knowledge of the theory, etc. of it. No academic can compete on the first and few can on the second (to say nothing of a trader like Talib, who knows nothing about bank regulation). Moreover, Cohen wasn't giving advice on leverage and CDOs (something that the elite law firms like S&C weren't very involved in). He'd be as good a choice as you could get.
More to the point on the role of outside counsel, it should be remembered that it was a partner at Enron's outside counsel who wrote one of the infamous Enron memos on gaming activity. Once the memo was revealed, it arguable brought down the lawfirm.
I also agree that understanding all of the nuances of high finance shouldn't be a barrier. They certainly weren't for MM's idol, Mr. Greenspan, who did such a fine job of understanding the influence of excessively low interest rates on asset bubbles.
You know that "mano o mano" means "hand to hand," right? I don't know why, but sometimes I get the feeling people think it means "man to man".
The people who had a wealth of experience with the everyday functioning of the banking system wrecked it. What the hell more do you have to know? Does a 2X4 across the head not get your attention?
If we are lucky the banking system mess will be fixed to some degree at a cost to taxpayers of $10 trillion dollars. Oh well. Let bygones be bygones I suppose. He is one hell of a nice guy and I think his wife went to school with Marie's cousin.
Perhaps we should just give up entirely on the idea of putting someone who, like, knows something about the financial system, in charge of the financial system.
I second Clay, how about we don't put the government "in charge of the financial system".
Megan, You may be right, but anyone nominated to Treasury by this administration is gonna get beat up pretty bad. Don't you notice the billions that have been poured into investment banks since October (yes, TARP was a Bush-Paulson initiative, but Obama signed off on it and Geithner was a key player) to no effect? Don't you notice that AIG is back asking for more? I'm a retired person sitting here watching the savings that I was supposed to live on go down the drain because Wall Street has zero confidence in this team. I'm mad as hell, and I'm not alone. Any Senator whose seat is up in 2010 has got to know that he or she is toast if they continue to support nomination of people who are part of the problem.
Call me whatever name you want, but there are people out there for Treasury who aren't part of making the mess. What about Stiglitz? Roubini? Has anyone even offered them jobs? And no, Krugman has stated many times that he wouldn't take it.
The people who had a wealth of experience with the everyday functioning of the banking system wrecked it.
Doctors operated on the man. His health worsened.
Clearly the correct response is to resort to faith healing.
Isn't that kind of like endorsing Pauly Walnuts for Attorney General because he, like, actually knows something about the criminal justice system?
Doctors operated on the man. His health worsened. - Dan
The doctors who operated on the man were removing his vital organs to sell them on the black market. They had even managed to convince themselves he'd be better off without them.
I would imagine the man wouldn't want to go back to the same hospital.
Believe it or not, there are still a lot of well-run commercial banks and investment banks in America, albeit mainly regional ones. Why not try to recruit some executives from these firms?
The temptation to suggest that you'd be almost perfect for the job, so long as the main requirement is knowing absolutely nothing about the financial system, is almost overwhelming.