Enough with punishing Wall Street by loading it down with a glut of regulations as retribution for its culpability in the financial crisis, says William D. Cohan, outspoken bestselling author of books about Wall Street firms and ex-JPMorgan Chase investment banker, in an interview with ThinkAdvisor.
As for his newest work, “Why Wall Street Matters” (Random House), in the interview, the financial journalist and former banker shares his recommendation for a better way to change financial services’ “bad behavior,” and stresses the personal responsibility of clients to choose trustworthy FAs.
Further, the candid Massachusetts native, 57, relates a painful experience to ThinkAdvisor: losing the wrongful-termination arbitration he brought against JPMorgan when the firm fired him in 2004.
Long a critic of Wall Street’s conduct in the years just prior to the financial crisis, Cohan, in his new book, calls instead for folks to celebrate Wall Street for the crucial role it plays as an engine of U.S. economic growth.
In the course of 17 years, he worked as an M&A investment banker at Lazard Freres, Merrill Lynch and finally, JPMorgan. An earlier career saw Cohan toiling as an investigative reporter covering public institutions in Raleigh, North Carolina.
Frustrated at being denied a dream job at The Wall Street Journal, he enrolled in Columbia University Business School, then entered financial services. When life in that arena ended bitterly, he returned to writing and penned three successive bestsellers profiling the Wall Street firms of Goldman Sachs, Bear Stearns and Lazard Freres.
He writes for a number of publications, including The Washington Post, The New York Times Magazine and Vanity Fair, where, in his March column, he brands President Donald Trump “a deeply unqualified…buffoon.”
But forthright Cohan spreads around the scorn, perhaps reserving his most severe appraisals — that is, of Sen. Elizabeth Warren and the Financial Industry regulatory Authority — for our interview.
ThinkAdvisor recently spoke by phone with the New York-based author, just back from a trip to Japan. Here are excerpts from our conversation:
THINKADVISOR: You write that Wall Street needs “smart regulation,” not political retaliation for the financial crisis. Do you have specific regulatory suggestions?
WILLIAM COHAN: This is an opportunity to use a scalpel, not a sledgehammer. Some of Dodd-Frank makes sense: higher capital requirements, less leverage. If Donald Trump changes the regulation on Wall Street, and elsewhere, it basically will be a good thing. But he strikes me as a sledgehammer type of guy, so I worry.
Sen.Elizabeth Warren is pushing a new Glass-Steagall bill. Her efforts to bring back Glass-Steagall are “inane,” you write. How so?
Where does one begin? She’s a demagogue on the issue of Wall Street for her own political gain. She taught bankruptcy at Harvard Law School; but to hear her talk about Wall Street, she doesn’t really understand how it works. Either she was a very bad Harvard professor, or she understands Wall Street perfectly well, which I assume she does, and is just exploiting it for her own personal gain. For her to go around denigrating anybody who ever worked on Wall Street is appalling.
You say that the government’s “demonizing Wall Street” has thwarted America’s economic recovery. How?
The capital markets, a huge asset for America, have to able to function smoothly. But now small and medium-size businesses are having trouble getting access to credit. Businesses [of this size] create most of the jobs in this country. But banks aren’t willing to make loans to them because [government-imposed] capital charges are too high. So, by hurting Wall Street, you also hurt the American economy because the two are highly correlated.
You were an M&A investment banker at JPMorgan Chase. Why did you leave and start to write books?
I left because I was fired. After 9/11, when the s— hit the fan, especially on Wall Street, JPMorgan made all these promises about the kind of revenue they were going to generate. But they couldn’t meet their projections. So they decided they had to fire people.
Did you like working there?
It was interesting to advise CEOs of companies about deals. But as you get more and more senior, that became less and less. And there were so many crazy things that went on with people’s behavior and backstabbing and political mind games.
Why were you terminated?
I had my best year ever in 2001. I was in my 40s and making a lot of money. It took them two years to get to me. After two years of putting me in nothing jobs and making me miserable, they fired me in 2004. They were ruthless.
Did you receive severance pay?
No. I was so angry at them for the way they treated me that, instead of taking a settlement, I took them to NASD arbitration [National Association of Securities Dealers, predecessor to FINRA] on the grounds that I was wrongfully dismissed. But I lost the arbitration, had to pay my lawyers and ended up not getting the settlement.
That was rough.