Rodge Cohen Interviewed on CNBC’s “The Strategy Session”

July 23, 2010

Mr. Cohen was a guest on the July 23 episode of CNBC's “The Strategy Session.” Mr. Cohen discussed the recent results of European bank stress tests, in which seven out of 91 institutions failed. “These results can't begin to tell the full story,” he said. “Until we get the transparency and credibility, there will inevitably be questions hanging over these tests.” The absolute number of banks that fail, he added, will “be far less important than if and when we see what the actual metrics were.” He also observed that, “everyone has been looking at sovereign debt default. Well, what assumptions were being used for the loan book? If you're talking about stress, banks have more loans than they have sovereign debt, and so that would be a critical element.” In addition, Mr. Cohen noted that unlike the in United States, the European stress tests have focused on exclusively on tier one capital. “It would be interesting to see where they come out on tier one common, which is what the U.S. used as a second test, as we come to a purer form of capital as the most important,” he said.