The Risk Taker
Trump’s Director of the National Economic Council
Gary Cohn is President Donald Trump’s Director of the National Economic Council. Throughout his many years at Goldman Sachs, he has proven himself to be a financial risk taker with little regard for the consequences of his actions. Years before becoming President and Chief Operating Officer of Goldman Sachs, Cohn took over the mortgage department and turned it into a major, risk-taking operation. While he was co-president, Goldman Sachs marketed “risky mortgage securities . . . backed by risky home loans . . . without telling investors it was secretly shorting the housing market.” The U.S. Securities and Exchange Commission (SEC) alleged Goldman Sachs “duped clients” and accused it of “fraudulently marketing securities linked to subprime mortgages.” Goldman Sachs ended up paying $550 million to settle with the SEC. Cohn was “a driving force behind the Goldman mortgage department” during this time and was instrumental in the bank’s practice of shorting the housing market.
Gary Cohn Worked His Way up at Goldman Sachs and Turned the Once Sober, Financial Company into a Risk-Taking Behemoth That Helped Tank the Economy by Encouraging Clients to Invest in Subprime Mortgages, While Betting Against Their Own Advice
- Cohn joined Goldman Sachs in 1990 and worked his way up to become president and COO. Cohn “joined Goldman Sachs in 1990 and became a Partner in 1994.” He became Goldman Sachs’s co-president in 2006, and in 2009 he became the sole president and COO. Currently he is the “President and Chief Operating Officer of The Goldman Sachs Group, Inc. He serves as a member of the Goldman Sachs Management Committee and Board of Directors. He is also the Chairman of the Firmwide Client and Business Standards Committee.” [Goldman Sachs Website, Gary D. Cohn Bio, Accessed January 3, 2016.]
- Cohn “turned the once sleepy [Goldman Sachs] mortgage department into a major trading operation, putting the firm’s capital to work for clients, buying assets and reselling them later, often for a tidy profit.” [Susanne Craig, “Bank Wages Battle to Save Reputation,” Wall Street Journal, April 19, 2010.]
- “When he took over the mortgage unit in 2000, it traded just $1 billion in securities a week. Three years later, the business was producing $50 billion in weekly trades, thanks to Mr. Cohn’s successful push to rev up risk-taking and use Goldman’s own capital to make a profit.”’ [Susanne Craig, “Goldman’s Cohn Is Next on Hot Seat,” Wall Street Journal, June 30, 2010.]
Despite Marketing $57 Billion in Mortgage Securities (Including $39 Billion Backed by Risky Home Loans), under Cohn’s Leadership Goldman Sachs Didn’t Tell Investors It Was Shorting the Housing Market.
- Before the financial crisis Goldman Sachs “marketed $57 billion in risky mortgage securities, including $39 billion backed by risky home loans in 2006 and 2007 without telling investors it was secretly shorting the housing market.” [Greg Gordon, “Goldman Executives: We Made Money Betting Against Mortgage Market,” McClatchy DC, April 24, 2010.]
- According to emails released by the Senate Permanent Subcommittee on Investigations, Cohn was one of the Goldman Sachs executives who “traded e-mail messages saying that they would make ‘some serious money’ betting against the housing markets.” [Louise Story and Sewell Chan, “Goldman Cited ‘Serious’ Profit on Mortgages,” New York Times, April 24, 2010.]
- To balance out a risky bet against the housing market, “at one point in the summer of 2007” a case was made “to Mr. Cohn that some mortgage assets were cheap and that Goldman should let him add $10 billion in positive bets. Mr. Cohn said no.” [Louise Story, “Senior Executives at Goldman Had a Role in Mortgage Unit,” New York Times, April 18, 2010.]
Cohn Was Described as a “Driving Force” behind Goldman Sachs’ Mortgage Department as the SEC and Congress Were Taking It to Task.
- In 2010, Cohn was described as “a driving force behind the Goldman mortgage department under assault by the SEC and lawmakers.” [Susanne Craig, “Goldman’s Cohn Is Next on the Hot Seat,” Wall Street Journal, June 30, 2010.]
- In 2010 when the SEC alleged that Goldman Sachs had “duped clients,” news outlets observed that the situation was “especially awkward” for Cohn. Cohn had “pushed hard as Goldman evolved over roughly the . . . [previous] decade from an elite private partnership with a reputation as a sober adviser on corporate mergers to a take-no-prisoners public company increasingly focused on using its own capital to drive its business for clients and its own accounts.” [Susanne Craig, “Bank Wages Battle to Save Reputation,” Wall Street Journal, April 19. 2010.]
- Ultimately, Goldman Sachs paid more than a half billion dollars to settle a fraud case brought by the SEC for marketing securities backed by subprime mortgages. “The firm paid $550 million to settle” the case brought by the SEC “accusing it of fraudulently marketing securities linked to subprime mortgages, without admitting to or denying the allegations.” [Max Abelson and Christine Harper, “Succeeding Blankfein at Goldman May Be Hurdle Too High for Cohn,” Bloomberg, July 24, 2011.]
- Some Thought If Anyone Would Be Fired Because of the Scandal It Would Be Cohn Because of His Position Overseeing Mortgage Trading at Goldman Sachs. Because of Cohn’s position overseeing the mortgage trading operation, when the SEC charged Goldman Sachs with defrauding investors in 2010, some speculated that “should the board choose to fire anyone” Cohn would be a “much better candidate to be thrown under the bus” than Lloyd Blankfein, Goldman Sachs’ CEO. [Douglas A. McIntyre, “Why Lloyd Blankfein of Goldman Sachs Keeps His Job,” 24/7 Wall St., April 19. 2010.]
Under Cohn Goldman Sachs Took Billions in TARP Money
- At Height of Financial Crisis, Goldman Sachs Took $10 Billion in Tarp Funds. In 2008, at the height of the financial crisis, the federal government created the Troubled Asset Relief Program (TARP) to stabilize “the banking system so money could start moving again throughout the economy.” It did this by launching “five programs . . . to provide capital to banks of all sizes.” Goldman Sachs received $10 billion in TARP funds “at the height of the financial crisis.” [Pallavi Gogoi and Barbara Hagenbaugh, “Goldman Sachs to Return $10B of Bailout Money,” USA Today, April 15, 2009; “Tarp 5 Year Update, 2008-2013,” U.S. Department of the Treasury website, accessed January 8, 2017.]
- Cohn Said Goldman Sachs and Other Major Financial Players Would Benefit from AIG’s Bailout. In a letter to shareholders, Cohn said Goldman Sachs and “every other financial institution and company” benefitted from American International Group’s (AIG) continued viability after the federal government bailed out AIG with $182 billion. [Tomoeh Murakami Tse, “Goldman Defends Actions, Says It Did Not ‘Bet against’ against [sic] Clients,” Washington Post, April 8, 2010.]
President-elect Donald Trump, Who Nominated Cohn for the Directorship of the NEC, Co-Owns a Building That Owes Nearly $1 Billion to Four Lenders—Including Goldman Sachs
- Donald Trump is a 30 percent owner of an office building in Manhattan that “carries a $950 million loan debt” owed to Goldman Sachs, the Bank of China, and two other lenders. [Susanne Craig, “Trump’s Empire: A Maze of Debts and Opaque Ties,” New York Times, August 20, 2016.]
Cohn’s Judgment, Character, and Concern for Average Americans Are Questionable at Best.
Cohn Has a History of Being Less Than Honest with Congress
- Cohn was not honest with Congress about how often Goldman Sachs sought federal emergency funding during the financial crisis. In 2010, while under oath, Cohn told the Financial Crisis Inquiry Commission that “Goldman had tapped the Fed’s discount window–the mechanism that allows banks to get emergency funding–only once for a ‘de minimis’ amount of money.” It later came out that Goldman “went to the discount window five times from the fall of 2008 to early 2010. The biggest drawdown was also the first, of $50 million.” The New York Times described Cohn’s not knowing about additional withdrawals as “another public relations misstep for a bank still cleaning up its post crisis image.” [Rob Cox and Agnes T. Crane, “Lesson in Being a State Company,” New York Times, April 3, 2011.]
Cohn Sought to Export Financial Scams Like Those That Led to the Subprime Mortgage Crisis in America.
- In 2009, Gary Cohn and his team visited Greece during their debt crisis, peddling “a new derivative scam based on potential revenue from Greece’s health care system.” Cohn was offering “a financing instrument that would have pushed debt from Greece’s health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards.” The tactics were described as “akin to the ones that fostered subprime mortgages in America.” The Greek government did not pursue this proposal. [Louise Story, Landon Thomas, Jr., and Nelson D. Schwartz, “Wall St. Helped to Mask Debt Fueling Europe’s Crisis,” New York Times, February 3, 2010; and Robert Scheer, “It’s Greek to Goldman Sachs,” Rapid City (SD) Journal, February 22, 2010.]
Cohn Is Known to Be “Arrogant,” Physically Intimidating
- Cohn, at “6-foot-3 and 220 pounds, can be intimidating, two former colleagues said. He would sometimes hike up one leg, plant his foot on a trader’s desk, his thigh close to the employee’s face, and ask how markets were doing. . . . Former Bear Stearns Asset Management CEO Richard Marin said Cohn’s arrogance is at ‘the root of the problem’ at Goldman Sachs. ‘When you become arrogant, in a trading sense, you begin to think that everybody’s a counterparty, not a customer, not a client,’ Marin said. ‘And as a counterparty, you’re allowed to rip their face off.’” [Max Abelson and Christine Harper, “Succeeding Blankfein at Goldman May Be Hurdle Too High for Cohn,” Bloomberg, July 24, 2011.]
- Martin Greenberg, who was the chairman of Amex, said Cohn “once choked another colleague over a trade.” [Max Abelson and Christine Harper, “Succeeding Blankfein at Goldman May Be Hurdle Too High for Cohn,” Bloomberg, July 24, 2011.]
While Trump Campaigned Hard Against Wall Street Elites and DC Insiders, Cohn Is Not Only an Elite Banker . . .
- Gary Cohn has attended the World Economic Forum in Davos, Switzerland, multiple times. [Jack Ewing, “Bankers Return to Davos with a Bit Less Swagger, New York Times, January 25, 2010; and Christine Harper, “After the Crisis, It’s Party Time Again for Bankers at Davos,” New Zealand Herald, January 26, 2011.
Cohn Is Also a Wall Street and Beltway Insider Who Pals Around with Congressmen and Regulators and Is a Regular at the White House
- Gary Cohn is “friendly with Republicans and Democrats in Washington,” where he “frequently goes to [meet] with regulators and Congressmen.” According to White House visitor logs, Cohn was on the roster of White House visitors in the first six months of Barack Obama’s presidency. The White House had “dozens of meetings” with Wall Street insiders including Cohn. [Ben White and Jake Sherman, “Trump considering Goldman Sachs president for top post,” Politico, November 30, 2016; Justin Baer, “Is Goldman Sachs’ Gary Cohn Ready to Step in for Lloyd Blankfein,” Wall Street Journal, September 30, 2015; Jeff Zeleny, “White House Visitor Log Lists Stars and C.E.O.’s” New York Times, October 30, 2009; and David D. Kirkpatrick, “In a Message to Democrats, Wall St. Sends Cash to G.O.P.” New York Times, February 7, 2010.]
Even Though Cohn Has Supported Some Financial Reforms . . .
- Gary Cohn, after President Barack Obama gave a speech discussing the need for reform in the finance industry, said that “tonally” the President “was correct” and that “reform is necessary.” [Andrew Ross Sorkin, “A Tough Crowd on Wall Street,” New York Times, September 14, 2009.]
- Cohn, in Goldman Sachs’ 2009 annual report, “cheered some of Dodd-Frank’s provisions, writing: ‘we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions.’” [Timothy P. Carney, “Goldman and JPMorgan Sit Safely behind the Walls of Dodd-Frank,” (Washington, DC) Examiner, February 2, 2015.]
He Remains Opposed to Basic Reforms Designed to Protect Consumers.
- Cohn “raised concerns that increased trading transparency” under Dodd-Frank would increase costs for Goldman Sachs, since the firm would have to spend money to circumvent the law. In 2010, Gary Cohn and Harvey Schwartz of Goldman Sachs attended a meeting with Elizabeth A. Duke, then a Federal Reserve Governor, and members of her staff. They discussed the Dodd-Frank Wall Street Reform Act. As representatives of Goldman Sachs, they “raised concerns that increased trading transparency would force many large institutional investors to conduct multiple small trades rather than a large single transaction, raising the costs associated with these activities.” [”Summary of Meeting between Governor Elizabeth Duke and Representatives of Goldman Sachs, October 14, 2010,” United States Federal Reserve website, accessed January 8 2017.]
Cohn Praised the Banking System Under Obama as Being in the “Best Shape It Has Ever, Ever Been by Far.”
- Cohn, in October 2016, following eight years of President Obama’s economic leadership, said the U.S. banking system was in the “best shape it has ever, ever been by far.” [The Independent, October 10, 2016.]
Cohn Is Unbelievably Wealthy and Out of Touch with the Needs of Average Americans.
One Year Before Goldman Sachs Was Bailed Out by the Federal Government Cohn Was Paid “about $67.5 Million,” and in 2015 It Was Reported That He Owned $340 Million in Goldman Sachs Stock.
- In 2007, Gary Cohn was reportedly paid “about $67.5 million.” (Ben White, “7 Goldman executives forgo bonuses for 2008,” International Herald Tribune, November 18, 2008.)
- Within a year of Cohn’s 2007 bonus and other compensation being approved, “Goldman Sachs took $10 billion from the U.S. Treasury . . . and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs.” [Michael J. Moore and Christine Harper, “Goldman Executives to Get $111.3M in Stock Bonuses,” Boston Globe, December 16, 2010.]
- In 2015 it was reported that Gary Cohn owned “Goldman stock . . . worth . . . around $340 million.” (William D. Cohan, “Wall Street Executives from the Financial Crisis of 2008: Where Are They Now?” Vanity Fair, March 18, 2015.
As Goldman Sachs Co-President, Cohn Claimed It Was Unfair That He Would Earn the Same Amount as His Counterpart–$53 Million.
- “At a meeting of senior Goldman executives in fiscal 2006, Mr. Cohn was told he would earn $53 million that year—the same amount as Jon Winkelried, who at the time shared the duties of president with Mr. Cohn and was at the meeting. ‘Well, that is hardly fair,’ Mr. Cohn said. He says the remark was made in jest. Not everyone saw it that way.” [Susanne Craig, “Goldman’s Cohn Is Next on the Hot Seat,” Wall Street Journal, June 30, 2010.]
In Stark Contrast to the Many Americans Who Lost Their Homes Thanks to Goldman Sachs’ Role in the Financial Crisis, Cohn Has a Weekend Home in the Hamptons, “an Apartment on Park Avenue,” and Other Residences in New York City, Including a SOHO Loft Purchased by His Wife for $4.7 Million.
- Cohn “has all the trappings of a New York insider, including an apartment on Park Avenue.” [Nathaniel Popper, “Succession Questions Rise at Goldman Sachs,” New York Times, December 1, 2016.]
- Cohn and his family also have a co-op on the Upper East Side. [Max Abelson and Christine Harper, “Succeeding Blankfein at Goldman May Be Hurdle Too High for Cohn,” Bloomberg, July 24, 2011.]
- Cohn’s wife, “jewelry designer and artist Lisa Pevaroff,” purchased a $4.7 million SOHO loft in 2014. The three-bedroom apartment featured “15 windows, four exposures,” and “exposed wood ceiling beams, brick walls, and columns,” as well as a fireplace and “a separate wing that has a second kitchen and living room.” [Dana Schulz, “SOHO Loft with Taxidermy Tendencies Sells for $4.7M,” 6sqft.com, August 19, 2014.]
- Cohn has a weekend house in Sagaponack, an area of the Hamptons that, according to Debbie Loeffler of the Corcoran Group, “quickly earned the nickname ‘Goldman Sachs-oponack’” because of the number of Goldman Sachs executives with homes there. [William D. Cohan, “The Man Who Walked away from Goldman Sachs,” Fortune, January 26, 2010; and C. J. Hughes, “Where the Wall Street Crowd Stays,” Hamptons Magazine, August 3, 2012.]
Over the Last Dozen Years, Cohn and His Wife Have Contributed Nearly $150K to Powerful Republican Members of Congress.
- Since 2004, Gary Cohn has given $144,600 to Republican candidates and causes, including contributions to Roy Blunt, Scott Brown, Eric Cantor, Pat Roberts, Marco Rubio, Pat Toomey, Kelly Ayotte, Tom Cotton, Rob Portman, and Kevin McCarthy. [Based on Data from CQ Political Money Line, Accessed January 4, 2017.]
- Cohn and his wife play both sides of the aisle, contributing to powerful Democrats as well. They are “longtime Democratic donors, having contributed to Al Gore, John Kerry, Hillary Clinton, and Barack Obama.” In fact, Gary Cohn was a “major contributor” to Barack Obama’s 2008 campaign. [Jeff Zeleny, “White House Visitor Log Lists Stars and C.E.O.’s” New York Times, October 30, 2009; and “Gary Cohn,” Gawker, February 3, 2008.]
Cohn and His Wife Attended Swanky Fundraiser with David Koch.
- Cohn, in 2015, was photographed with David Koch at the New York University Langone Musculoskeletal Ball, as can be seen below. [”NYU Langone Musculoskeletal Ball 2015,” Getty Images website, accessed January 8, 2017.]