NEW YORK (Reuters) – Gary Cohn, the former economic adviser to U.S. President Donald Trump, gave a ringing endorsement of Wall Street bankers on Monday, arguing that borrowers were just as responsible for the 2007-2009 financial crisis as lenders and ridiculing rules intended to make the system stronger in its aftermath.
In a wide-ranging conversation at an event hosted by Reuters Breakingviews that was pegged to the 10-year anniversary of Lehman Brothers’ collapse, Cohn’s comments mostly tracked the sentiment of Wall Street bankers and other wealthy Americans who have felt unfairly maligned for the mortgage market’s collapse and the economic downturn that ensued.
He also praised JPMorgan Chase & Co’s Chief Executive Jamie Dimon, who last week made waves by saying that he could beat Trump in an election. Calling Dimon a “phenomenal” choice, Cohn said, “Jamie would be a spectacular president… After having seen the inside of the Oval Office and worked inside there for hours upon hours a day, it’s in many respects very similar to running a complex multi-national global (company).”
Shortly after making his comments Dimon, said he was not running for president.
Once the No. 2 executive at Goldman Sachs Group Inc, Cohn argued that no top bankers should have gone to jail for their role in the crisis because they did not necessarily do anything illegal, despite what populist movements like Occupy Wall Street have demanded.
Defending his fellow bankers, who are often blamed for causing and worsening the crisis, Cohn said borrowers played a hand in their financial disasters as well.
“Who broke the law? I just want to know who you think broke the law,” said Cohn. “Was the waitress in Las Vegas who had six houses leveraged at 100 percent with no income, was she reckless and stupid? Or was the banker reckless and stupid?”
Cohn also mentioned former Lehman Chief Executive Dick Fuld who lost a big chunk of his net worth when his company filed for bankruptcy. “Who was Dick Fuld defrauding? Himself?”
In the aftermath of the crisis, Cohn said regulators and legislators went too far in creating restrictions that forced banks to grow in size because only the large could afford to pay for the added layers of oversight.
He criticized Elizabeth Warren, a prominent Democratic Senator who often attacks big banks, for using a simplistic measure of industry profitability and said rules that were part of the Dodd-Frank reform package have only solidified big banks’ competitive position.
“We haven’t ended ‘too big to fail,’” Cohn said. “We made rules and regulations that made (the big banks) bigger. Congratulations.”
After 26 years at Goldman, Cohn left Wall Street for Washington and the Trump administration because he worried that regulation and taxes were constricting growth in the United States, he said.
“We needed to get competitive with the rest of the world,” Cohn said. He spent a little over a year in the White House, and left after pushing through a major tax overhaul Trump signed in December. “We now have taxes to a point where we are globally competitive at 21 percent.”
Since leaving the Trump administration in March, Cohn has been spending time with his family and exploring business opportunities, he said.
Cohn, 58, resigned after trying to soften Trump’s plans for hefty steel and aluminum tariffs. Since his departure the administration has strengthened its protectionist stance, passing tariffs against China, the European Union and other large trading partners.
Trump escalated his trade war with China by slapping 10 percent tariffs on about $200 billion worth of Chinese imports.
Cohn defended Trump’s stance against China, saying the Asian country was taking advantage of the United States.
“If we are not getting paid specifically by the Chinese for what we have invented and the Chinese are just stealing it and knocking it off, the global economy, globalization doesn’t work,” Cohn said.
Reporting by Anna Irrera and Svea Herbst-Bayliss; Writing by Lauren Tara LaCapra; Editing by Lisa Shumaker