Gary Cohn rips into Wall Street-critic Elizabeth Warren, calling her attacks on banks 'naive'

Akin Oyedele

Sep 18, 2018, 22:07 IST

Gary Cohn rips into Wall Street-critic Elizabeth Warren, calling her attacks on banks 'naive'

REUTERS/Ruben Sprich

Gary Cohn doesn't think tax cuts primarily helped the rich.

Gary Cohn, the former top economic adviser to President Donald Trump, responded to some of Sen. Elizabeth Warren's criticism of Wall Street banks and the Trump administration on Monday.
At a Reuters event, Cohn disagreed that the tax cuts enacted earlier this year primarily benefitted the wealthy.
He also said Warren's argument that post-financial-crisis regulations should be tougher was "naive."

Gary Cohn, the former top economic adviser to President Donald Trump, responded Monday to some of Sen. Elizabeth Warren's criticisms of the current administration's policy and Wall Street banks.

Warren repeated during an interview with The New York Times last week that the tax cuts, which Cohn championed, helped corporations save billions of dollars. She also said Goldman Sachs had given Cohn a "pre-bribe" when he joined the Trump administration.

Reuters' Gina Chon, who interviewed Cohn at an event in New York on Monday, asked him to respond to Warren's argument that banks' profits show post-crisis regulations should be tougher. Earlier Monday, a report from the New York State comptroller showed that Wall Street's pretax and inflation-adjusted profits rose to the highest level since 2010.

Warren's point is "one of the most naive statements I've ever heard," Cohn responded. He added, "that's a nice answer from me."

Cohn countered that a better way to gauge banks' profitability is by looking at their return on equity, which gauges how much of shareholders' money is generating profits. This stood at 12.8% for Goldman Sachs in the second quarter. "They worked their butt off to get to double digits," Cohn said of his former colleagues.

"Return on equity is not, I think, in the vocab of a lot of members of Congress," Reuters' Chon said.

"Well then they shouldn't be talking about record earnings," Cohn responded. "By the way, ignorance is not a good defense."

Cohn also disagreed that the tax cuts Trump signed into law in January primarily benefitted the rich. He said municipal workers like police officers and teachers were the largest class of shareholders, although a New York University research paper shows that a whopping 84% of stocks is still owned by the wealthiest 10% of households.

Cohn also responded to Warren's call for a return of the 1930s Glass-Steagall regulation that required banks to separate commercial and investment banking. He said there were existing Federal Reserve restrictions on whether banks can use retail deposits to fund their broker-dealer operations.

"I think she taught law at Harvard, I think she shouldn't need it explained," Cohn said.

Warren is one of Congress's harshest critics of Wall Street banks and conglomerates. In the New York Times interview, she accused Amazon of anti-competitive behavior.

"It's interesting to watch Washington go after the next industry ... and now tech," Cohn said. "It seems like Washington's favorite past-time is to pick on success."

Warren's office did not immediately respond to a request for comment.