Sullivan & Cromwell Chairman: Trauma Surgeon of Wall Street (NYT 11/2009)
Sullivan & Cromwell Chairman: Trauma Surgeon of Wall Street (NYT 11/2009)
Earlier this fall, after a busy month of shuttling to Washington, H. Rodgin Cohen, the dean of Wall Street lawyers, settled into a table upstairs at the Red Hat, a favorite restaurant overlooking the Hudson River here in the Westchester village where he lives. He and his wife of 40 years, Barbara, ordered modestly (and identically) — salad, swordfish steak, glasses of Chardonnay — and the table talk was undemanding in a casual, nerdy way.
Mr. Cohen, who is known as Rodge, wondered at one point how many Hitchcock films revolved around “high places” as a leitmotif. Barbara did not know — and did not seem to care — so he rattled them off himself with enthusiastic detail: “Saboteur,” “To Catch a Thief,” “North by Northwest,” and, of course, “Vertigo.”
After they had paid their check, they went to fetch the car, and Mr. Cohen, a Boston fan since his days at Harvard Law, glanced down at his BlackBerry to check on the Red Sox. He drives a Subaru, a humble ride for a man who earned millions last year arranging shotgun weddings for the busted firms of Wall Street, and standing next to Barbara in the darkness, Rodge Cohen, a titan of the banking bar, struggled with his automated key, initially unable to — woop woop woop — release the lock.
It was a typical, and typically disarming, moment with Mr. Cohen, the chairman of Sullivan & Cromwell and the man who, aside from government officials like Henry M. Paulson Jr., Ben S. Bernanke and Timothy F. Geithner, played perhaps the largest role of all in the gruesome doings of the Wall Street bailout last year. All told, from March 2008, when Bear Stearns was purchased for a song by JPMorgan Chase (both Sullivan & Cromwell clients), to mid-September, when A.I.G. (another client) was handed several billion by the government, Mr. Cohen, 65, took part in a breathtaking 17 financial deals, often hurrying among negotiations like a surgeon running between O.R.’s.
“Every time I looked up, it seemed like Rodge was in the room,” said Mr. Paulson, the former Treasury secretary. It is a testament to Mr. Cohen that Mr. Paulson’s spokeswoman initially said he was no longer “doing interviews” (he is working on a book), then called back to say the secretary would make himself available, given the subject.
For those of a populist bent — those, that is, who saw last fall as a potentially disastrous shift of risk from Wall Street to the taxpayer — there is certainly an urge to discern two horns and a tail on Mr. Cohen, whom the blog Zero Hedge recently referred to as the “overlord and viceroy of all Western capitalism.” He is not, after all, a government employee confirmed by, and accountable to, Congress, but a lawyer in private practice, a Man Behind the Curtain who, by way of billable hours, earned his keep on the near financial ruin of the country.
Mr. Cohen’s influence over Wall Street is both legendary and pervasive, reaching back to the 1980s, when he helped to consolidate the industry, and then to the 1990s, to shape the regulatory scheme that permitted last year’s unprecedented outlay of federal dollars. And some of the deals that he advised on, like Wachovia’s purchase of the mortgage lender Golden West, turned very sour and may have helped contribute to the meltdown.
Still, it can be difficult to drum up rage against a man who is so mild, courtly and uncommonly unassuming. Indeed, in dozens of interviews with clients, competitors and government officials, it was difficult to scare up a critical word about him.
“He looks like Mr. Peepers,” said Robert K. Steel, a board member of Wells Fargo bank and a former top official at the Treasury Department. “He’s not a demonstrative person, not 6-4, dark and good looking. But you forget about the fact that he’s 5-2 and weighs 100 pounds wet. He’s a trusted adviser. When I worked in Washington, he would always give a balanced read of the pros and cons of a situation with a knowledge so expansive you’d have to go to five other places just to get his level of sophistication.”
A few characteristics tend to crop up regularly in conversations about Rodge Cohen: his vast knowledge of the banking sector (he has worked in the industry since joining Sullivan & Cromwell in 1970); his diligent, perhaps obsessive, work habits (he sets his alarm for 4:58 a.m. so he has a two-minute grace period to check for faxes before the televised financial reports begin); and his old-school, other-directed, gentlemanly style, which has served him well in dealing with the large portfolios (and larger egos) of his clients on Wall Street.
Edward Crutchfield, the former president of First Union Bank in Charlotte, N.C., met Mr. Cohen in the early 1970s when Mr. Crutchfield was, as he put it, a “young guy on the move, hellbent to make a lot of acquisitions.”
“I needed a lawyer,” Mr. Crutchfield recalled in a recent interview. “I mean, a good lawyer — not a domesticated lawyer, a killer.”
But when he arrived at Sullivan & Cromwell, the partners told him, to his great dismay, that their senior mergers and acquisitions man was not available. “They told me, ‘We have this young lawyer, though, who’s very good, and you won’t be disappointed.’ ” It was, of course, Mr. Cohen; Mr. Crutchfield remembers thinking, “Damn, they handed me off to the second string.”
But in the intervening decades, the two men worked together on as many as 80 deals.
“He is a killer, so he’s feared, but he’s also trusted,” said Mr. Crutchfield, who is now retired and mainly hunting quail. “He’s a diminutive fellow, but he’s got a brain the size of Chicago and a heart to match. I’ve never met anyone who combines that kind of calm humanity and integrity. You just don’t find that kind of emotional and intellectual package in one head.”
H. RODGIN COHEN — the H is for Henry, his maternal grandfather; Rodgin is his mother’s original name — was born in 1944, in the middle-class Fort Hill section of Charleston, W.Va. His father, Louis, earned a living running drugstores and his mother, Bertie — who is 95 and still lives in the same house he was raised in — was a high school debate and speech teacher involved in the United Way, the PTA and the garden club. Mr. Cohen’s younger brother, Alan, is the director of Children’s Hospital of Philadelphia.
His father served as president of their Orthodox synagogue, and took a dim view of the reigning injustices of the Jim Crow South. Mr. Cohen recalled that when he was a boy, the film “Around the World in 80 Days” arrived at one of Charleston’s three theaters and attendance was so robust that his father agreed to sell tickets at one of his stores. “But when he found out that the theater was segregated, he simply stopped selling the tickets,” Mr. Cohen said.
A few years earlier, when the authorities insisted that Louis Cohen segregate his soda fountains, he refused — and instead removed them from his stores. “The most important lesson I learned from him,” said Mr. Cohen, “was how to deal with people. He just treated all people according to who they were, not what they were.”
After studying in the local public schools through junior high, Mr. Cohen was sent north to Deerfield Academy in Massachusetts. Then Harvard (class of 1965), followed by Harvard Law (1968). “I wasn’t even sure I wanted to be a lawyer,” he said. “Law school was just the closest thing to continuing a liberal arts education.”
He planned, in fact, to become a historian (though he claims, a little slyly, to see no relevant connection in his interests: American history, 19th-century British history and the Roman Empire). But he was drafted into the Army in 1968 and, while virtually everyone else in his basic training group was shipped off with the infantry to Vietnam, he wound up as a military lawyer at Fort Monmouth, N.J., where he spent much of his war trying to disqualify a miscreant manufacturer of radios from a government contract.
He had met Barbara at a wedding of some college friends and they were married in 1969 in Minneapolis, not far from Grand Rapids, Minn., where she was raised in a family that owned a clothing store. When Barbara was in the 10th grade, her family moved to Fargo, N.D., where her parents ran a drive-in restaurant called King Leo’s. “I felt it was a very unworldly place,” she said of North Dakota. “Even though I’d grown up in a smaller town, people in northern Minnesota at least looked outwardly a bit.”
In 1970, Mr. Cohen interviewed at Sullivan & Cromwell and, after he accepted a position — “I liked the intersection of contracts, the law and the regulatory overlay” — the couple moved to Tarrytown, N.Y., where they lived, moving only once (from an apartment to a house), until 1997. They had a son and a daughter — Mr. Cohen refused to discuss them at all — and eventually moved downriver to Irvington, to a comfortable though hardly opulent home at the end of a private drive, furnished tastefully with pastel walls and Japanese vases.
As for leisure, Mr. Cohen tends toward reading (a busman’s holiday, of late, with several books about the meltdown); the symphony; the theater (“Ruined,” about the civil war in Congo, was a recent favorite); and walking at a nearby aqueduct with his rescued boxer named Bacall.
Bacall, in fact, stood on her hind legs pawing at his lap throughout an hourlong interview in Mr. Cohen’s living room last month. At one point, she jumped up onto the couch, prompting his wife to say: “No, Rodge, not up there. Not unless you want me to reupholster the sofa.”
Mr. Cohen removed the dog. “That would be expensive,” he said.
ONE bright day in mid-September, Mr. Cohen spent his morning in Washington, then flew back on the Delta shuttle for afternoon meetings in his office on the 30th floor of Sullivan & Cromwell’s building on the bay in Lower Manhattan. When he walked in, his assistant handed him coffee — in a “World’s No. 1 Dad” mug — and he sat down at a table surrounded by pictures of his former dogs, a signed portrait of Sheryl Crow (he’s a fan) and a view of the Statue of Liberty.
Other than the 6:56 a.m. train from Irvington, the New York-to-Washington route may be Mr. Cohen’s most-traveled path of late. After all, as the nation’s banks recover (or claim to), there has been a radical shift in where they earn their money: away from Wall Street and corporate America and toward the capital and federal largess.
Mr. Cohen is perhaps unique among lawyers of his stature in having what a New York investment banker, Gary W. Parr, called “trusted relationships with people in government.” Those relationships are, in fact, so strong that the former Treasury official in charge of financial institutions during the bailout often called Mr. Cohen to ask, “So O.K., Rodge, how do we make this work?”
“He was one of my kitchen cabinet of advisers,” said the former official, David G. Nason. Sometimes that meant getting advice on loan guarantees or on investing private equity in banks, though whatever the subject, Mr. Nason said, “he was always available as a sounding board.”
Mr. Cohen’s role as a sounding board could not, of course, be divorced from his representation of the very banks that stood to gain from the federal programs he advised on; Mr. Nason said that these conflicts of interest were managed with both openness and trust.
“When you’re dealing with a Rodge Cohen, you begin by saying, ‘This is sensitive information, and you’re not going to use it for your own personal benefit,’ ” Mr. Nason explained. “If they do use it for personal or client gain, they’re not going to be part of the discussion anymore — and they like being part of the mix.”
But the conflicts, or perceived conflicts, apparently became insurmountable last spring, when Mr. Cohen was under consideration for the No. 2 spot at Treasury, then suddenly — and somewhat clumsily — withdrew his name. He refused to discuss the matter (the only subject he declined to entertain other than his children), but two former government officials suggested that his deep ties to Wall Street created an uncomfortable air at a time when, among other things, the scandal over bonuses at A.I.G. had just erupted.
Mr. Cohen is a Democrat — he has, over a decade, given tens of thousands of dollars to Charles E. Schumer, Hillary Rodham Clinton and Harry Reid, as well as Republicans like Elizabeth Dole and Alfonse M. D’Amato — and described his politics as “progressive socially and middle-of-the-road on foreign policy.” But by nature and vocation, he is a friend to the banks. “Even the firms that have done the best,” he said, “the Goldman Sachs and JPMorgans, fully understand how close we were to an abyss. They’re not out there beating their chests saying how great they are. Rather, they’re saying how close we came ourselves.”
Unlike some on Wall Street, though, Mr. Cohen supports ideas like increased capital requirements for banks, the creation of a government body to oversee the dissolution of failed institutions and the establishment of some still-hazy audit board — an internal “risk committee,” he called it — to ensure that banks do not again leverage themselves off cliffs.
“We have clearly seen the burial of the idea that government should step aside and simply let the markets do what they will,” he said. “You have to have government as a watchdog over excessive risks and abuses.”
The only time, in four interviews, that Mr. Cohen appeared to become defensive was while discussing the taxpayers’ role in cleaning up those excessive risks on Wall Street.
“Almost all the burden is now being borne by the banking industry itself,” he said, making reference to “fees,” “warrants” and various “special assessments.” When pressed, however, he acknowledged that ordinary citizens are — at least potentially — on the hook.
“They are at risk,” he allowed, “though if the banks stop lending, the taxpayer will be more at risk.”
His gaze sharpened slightly, his eyebrows arched. Sitting in his office over Wall Street, the likable lawyer had just gone somewhat stiff.
By ALAN FEUER