Rodge Cohen Looks Back on Lehman Collapse

Financial Post, The Times Online and The Lawyer - September 12, 2009

This week marks the anniversary of the collapse of Lehman Brothers, the major bank that failed at the onset of the financial crisis. SULLIVAN & CROMWELL LLP Chairman Rodge Cohen, a former adviser to Lehman, was quoted in the Financial Post, The Times Online and The Lawyer about the efforts to save the company.

  • In an article in the Financial Post, “Lehman’s Last Days,” Mr. Cohen said that “The decision to let Lehman go brought us to the edge of a financial cataclysm. What happened was there was a willingness to let Lehman go and probably an expectation that it wouldn’t happen. A lot of people thought Barclays would do a deal. Fortunately, the same people involved in the decision to let Lehman go then made a number of subsequent wise decisions and were able to pull us back from a the financial abyss.”

  • An article in The Times Online, “Lehman, Barclays and the Countdown to Financial Crisis,” questioned why Henry Paulson, then the U.S. Treasury Secretary, decided not to bail out the bank. “I have puzzled over this for a long time. The idea that the U.S. government wanted to set an example of Lehman is inaccurate, but it was not prepared to provide substantial support to enable Lehman to survive,” Mr. Cohen said. As the U.S. government did not bail out the bank, the team working to save it saw a possible solution in the British government. “We were told that the U.K. government did not want Barclays to go forward—that it did not want this cancer to affect the U.K. banking system. We understood this was the issue, and that it did not get to a question of whether there would be a guarantee,” Mr. Cohen said.

Mr. Cohen was also interviewed in several articles by The Lawyer about his role in the financial crisis:
  • In a October 12 article, “Cohen: Learn the Lessons of Lehman,” Mr. Cohen shared his thoughts on the state of the world economy today. “Well, I guess the best way to put it is 12 months ago we were looking down a true financial abyss,” he said. “Today, if you continue the metaphor, we’ve taken a number of steps back, but we haven’t climbed off the cliff.” Though the article noted that progress is marginal, Mr. Cohen indicated that changes that have been made. “Major companies have failed or been merged out of existence. But for those that remain there is a far greater recognition of the risks in the system and a far greater recognition of some of the flaws in the system, which were deep-seated.”
  • In a September 21 article, “Lehman: The Lessons Learnt,” Mr. Cohen noted that AIG was also a concern at the time of the Lehman collapse. “Obviously Lehman was dominant but AIG was already quite active and complicated,” he said.
  • Finally, a September 16 article, “Lehman: The Day the Financial World Changed,” noted highlights of Mr. Cohen’s work during the financial crisis.