Wall Street Frets Over Lost White House Ties as Cohn GoesBy and
Trump vilified bankers, then hired them. Now they’re leaving
‘Oh, that’s a problem,’ one bank executive said to himself
On Tuesday morning in Manhattan, Kathy Wylde sent off an email inviting Gary Cohn to get together again. She runs a group of well-connected corporate executives, the Partnership for New York City, that met with Cohn and Donald Trump to talk infrastructure last year.
Hours later, Wylde clicked open an email from a colleague with the news that Cohn, former president of Goldman Sachs Group Inc., is resigning as President Trump’s top economic adviser.
“So much for that,” she said to herself. Yet as the news sunk in, Wylde grew worried. Cohn’s departure “undermines confidence that there’s somebody in the White House who understands the financial industry,” she said later. “It’s concerning.”
On the campaign trail, Trump painted Wall Street executives as greedy villains. Then he tapped them for top roles across his administration, where they helped push for hefty corporate tax cuts and deregulation that the industry had craved for years. Now, with Cohn leaving the White House not long after former Goldman Sachs colleague Dina Powell, the industry is troubled. It’s losing friends on the inside.
For more than a year, the nerves of the most powerful people in finance have been soothed by Cohn’s presence in the White House. Days before Trump’s inauguration, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon explained in a Bloomberg Television interview why he wasn’t worried about the future of the U.S., despite the incoming president’s populist campaign. Trump was bringing on “very serious people,” the banker said, mentioning Cohn.
Dimon went on to say some people were worried about Trump’s unusual trade policy, but that it was “blown out of proportion” with such rational people at the helm. This week, Cohn said he was leaving his post as the administration prepares to impose steep tariffs on steel and aluminum that he has opposed. There was no mention of the dispute in a statement distributed by the White House.
The possibility that Cohn’s departure will unleash protectionist policies jarred global markets. The S&P 500 Index was down 0.8 percent at 12:03 p.m. in New York. Shares of all major U.S. banks fell, led by Goldman Sachs’s 1.7 percent drop.
Tom Nides, the vice chairman of Morgan Stanley, was sitting alone in his office watching CNN when the news broke. “Oh, that’s a problem,” he said out loud.
“You can like Gary or hate Gary, but experience matters and Gary has plenty of experience,” Nides, who was a deputy secretary of state during the Obama administration, said later. “And I think that’s really important, in both calm markets and choppy markets.”
Trump will struggle to find someone who gives market participants as much comfort as Cohn did, Cowen analyst Chris Krueger wrote in a report. “Wall Street just lost its security blanket.”
Cohn brought a “sane voice to a very chaotic cabinet,” said Mike Novogratz, a former Goldman Sachs executive who has become one of bitcoin’s most outspoken champions.
“While I didn’t personally get how he could support the president, I was damn glad he was there,” Novogratz said.
To be sure, banks are still getting their way on many fronts in Washington, especially when it comes to easing rules passed in the wake of the financial crisis. The Senate is poised to advance a sweeping rollback that will cut the number of lenders considered “too big to fail.” Elsewhere, the Treasury Department has recommended many more tweaks.
Powell, the former deputy national security adviser, is going back to Goldman Sachs. But Steven Mnuchin, a former executive there, is still Treasury secretary.
The timing of Cohn’s exit is what worries Tom Herrick, president of Luxon Global, the asset management division of Luxon Financial. “Coming in the middle of a slippery slope of trade threats is more disconcerting,” he said. “What we get next is hard to say.”
Lloyd Blankfein, Cohn’s longtime boss at Goldman Sachs, said on Twitter that he is “disappointed to see him leave.”
And Wylde, whose group is co-chaired by the heads of Citigroup Inc. and Mastercard Inc., will miss Cohn. “Gary,” she said, “was one that we counted on.”