the swamp

Gary Cohn Has Profited From Big Mistakes. So Why Not Go Work for Trump?

Gary Cohn.

Gary Cohn, the current head of the National Economic Council, likes to say he is a fan of bad decisions. “I’m really good at making mistakes,” he told business-school students at Sacred Heart University last year. And at American University, his alma mater, in 2009: “I always saw 95 percent of my great decisions start out as bad decisions.”

Last November, when Cohn walked into Trump Tower, he didn’t expect to be making decisions of any kind. He was there, like Floyd Mayweather before and Kanye West after him, because he had been summoned. In his case, to impart the macroeconomic wisdom he possessed as president of Goldman Sachs onto the newly elected president of the United States: Donald Trump, the man the smart money said would never win.

“It was crazy,” Cohn told a friend later of the meeting, which was supposed to last 15 minutes but stretched to an hour and a half. He found himself explaining to the former star of The Apprentice why a stronger dollar led to a weaker economy. The meeting concluded with Trump wondering aloud if he should make Cohn his Treasury secretary. This was awkward because Trump’s campaign-finance chair, Steven Mnuchin, whom Cohn had worked with in the same partner class at Goldman, was sitting right there and already had dibs on the position.

Ha-ha. Trump was only kidding.

Though seriously, he later asked, what about director of the National Economic Council? Would Cohn want that job?

“That I would consider,” Cohn told him.

Afterward, Cohn’s New York cohort would debate which part of this story was the craziest: Was it that Trump had offered the job to a 26-year veteran of Goldman Sachs — a bank whose greedy sibilance Trump had repeatedly invoked on the campaign trail, and whose CEO, Lloyd Blankfein, was targeted in a campaign attack ad that the Anti-Defamation League denounced as anti-Semitic?

Or was it that Cohn — Blankfein’s longtime consigliere, Jewish, a lifelong Democrat — said yes?

“I was like, you gotta be kidding,” says one of Cohn’s colleagues at Goldman, who, like most people, saw Cohn as a technocrat, a pragmatist.

“I know he has a good heart,” says one New York society lady who supported Hillary Clinton and is friends with Cohn and his wife. “But I cannot for the life of me understand what he is doing.”

Then again, Cohn had been a trader for all of his adult life. “He has that whole feel in his body and brain and fingertips,” his pal Michael Ovitz once said, and the opportunity that Trump was presenting him got those synapses firing. Like all wealthy businessmen of a certain stature, Cohn had considered what it might be like to lead something bigger than a corporation. “Wouldn’t it be great to be a U.S. senator?” a friend remembers him saying in 2009, after Clinton stepped down from her Senate seat. “To be in a position where you could have a lot of influence in a new administration?’”

Perhaps this wasn’t the ideal administration for a man whose wife had served on the board of Planned Parenthood and whose daughter works at the Huffington Post, but in the Trump administration he would be the smartest guy in the room, and with the Republicans also controlling Congress, there was potential to make big moves. Spending on infrastructure, cutting taxes, and rolling back financial regulation had already been on Trump’s agenda. Cohn could very likely do away with the onerous restraints that had been placed on the banking industry after the mortgage crisis, like increased capital requirements and the ban on proprietary trading, which had become pet peeves of his.

“I seem to be in Washington every week trying to explain to them the unintended consequences of overregulation,” he’d complained to the Sacred Heart students. (“He was definitely one of those people that had an attitude of ‘Fuck you guys, you don’t understand what you are talking about,’ ” according to a former Obama-administration official who met with Cohn and Blankfein numerous times.)

The appointment would also be a triumphant exit from a situation that had become untenable. Although Cohn was next in line to be CEO at Goldman, Blankfein showed no signs of budging, even after he was diagnosed with lymphoma in 2015. Some of this reluctance reportedly stemmed from Blankfein’s assessment that the reputational damage from the financial crisis had wiped out his own chances of a public-service career. “After Gary arranged for Lloyd to get cancer, things seemed to be looking up for him,” observes one former colleague, in arch reference to the Shakespearean drama that had been playing out in the Goldman C-suite. “But unfortunately, he bounced back.”

Cohn accepted Trump’s offer. And once the public had processed the chutzpah of the swamp-draining president’s hiring no less than five alumni from Government Sachs, even liberals started wondering whether this wasn’t a terrible development. In a White House that contained Steve Bannon, Omarosa, and a random barre instructor, the presence of Goldman Sachs seemed comparatively normal. After all, we’d seen their kind before, from Robert Rubin under Clinton to Henry Paulson under Bush, and while it was true that they had wrought significant havoc, at least they had the decency to act as though they weren’t doing it on purpose. At least they were capable. And if anyone had the temperament to stand up to Donald Trump — “to steer him in a way that is least destructive,” as someone close to Cohn put it, “like how presidents would normally act?” — it might be Gary Cohn.

Cohn, bottom right, with Trump and other officials at Mar-a-Lago, being briefed on strikes on Syria. Photo: Shealah Craighead/The White House via The New York Times

Growing up in Cleveland, Cohn was severely dyslexic, which at the time just meant dumb. He once heard a teacher tell his mother he’d be lucky if he became a truck driver. “I was driven, unbelievably driven,” he said at a conference last year, “to prove to myself and everyone in the world I could be successful.”

Cohn’s origin story, which appeared in Malcolm Gladwell’s book David and Goliath, has become Wall Street legend. Hanging out by the New York Stock Exchange on an afternoon off from his job selling window frames, he heard a guy in a suit say he was catching a cab to La Guardia; sensing a potential job opportunity, he offered to split the ride.

“Do you know what an option is?” the guy asked.

“Of course. I know everything,” Cohn bluffed.

As a trader, Cohn became known for his ability to stomach big risks, like during the crash of 1987, when he piled into bonds and ended up “looking like a giant superstar from a bet no one thought was going to happen,” according to a fellow trader. At J. Aron, a subsidiary of Goldman, he attached himself to Blankfein and became his fixer, following him up the ladder. “I solve his business problems,” he told me during a 2011 interview (the last time I spoke with him), in which he juggled a baseball bat between his thighs. “Knuckles,” “knife fights,” and “Machiavellian” are words that people use to describe the culture the pair cultivated during their rise to power, which coincided with an overall company shift that valued trading over investment banking. It made them both enormously rich — in 2007, Cohn took home $67.5 million.

Wall Street, which had been jittery about the 2016 election, was happy to have an “adult in the room,” as Cohn became known. Or “a first-class experienced adult in the room,” as Tom Barrack, an investment manager and longtime Trump friend, told me. If you could ignore what this implied about the maturity of the president, it was a comforting thought. Here was someone who might curb some of the more distressing news leaking out of the White House. (“Was it a strong one that’s good for the economy, or a weak one?” the president had reportedly asked an adviser in one late-night phone call.)

At first, it seemed to be going well. Trump loved Cohn, who was just his type. Bald as an eagle and built like a linebacker, he’s a “guy’s guy,” as one friend puts it. His self-assured confidence elicited an uncharacteristic amount of respect from his boss. And, according to Barrack, the president appreciated Cohn’s particular skill set. “The experience of somebody knowing how to run thousands of people in an organization is unique,” he says. “Where other people may have great ideas, they may not have had that talent.”

Which may have been a subtle dig at other members of the administration, who reportedly resented the ascendance of this New York Democrat, this jock who had hijacked their Make America Great Again production. Such as Reince Priebus, the less-than-alpha-male chief of staff, whom Trump was reportedly always threatening to replace with Cohn, and Steve Bannon, who clashed with Cohn over policies like remaining in the Paris climate accord. “Gary is such an enormous threat to those guys,” says the source close to Cohn’s team, who characterizes the warring factions as “chaos cheerleaders versus competence.”

Cohn’s first big appearance came with the announcement that the Department of Labor would review its fiduciary rule, meant to require financial advisers to act in the best interests of their clients: “This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger,” Cohn told The Wall Street Journal. The analogy was terrible, but Wall Street loved it because Wall Street hated the rule (which inhibited its ability to make money off the stupidity of non–Wall Street people). The stock market went up, and so did Cohn’s stock within the administration. Hope swelled in the competent faction. “What if there’s a scenario where they become the preferred advisers?” the Cohn source said to me in March. “I really — and I don’t say this lightly — think they could save the country.”

But this spring, things started to turn, as they do in the volatile market of the Trump White House. Cohn and his team, according to sources, had for months tried to get Trump’s attention on the particulars of tax reform, to no avail. Until, suddenly, they had it, when Trump promised to deliver the biggest tax cut “ever.” The subsequent press conference, at which Cohn and Mnuchin circulated a vague one-page wish list they’d evidently cooked up over the weekend, was widely ridiculed. “We will get back to you with definitive answers on all these details,” Cohn said. “We have a broad-brush view.” And finally: “Look, we will give you more details as we have them.” Then there was Trump’s interview with The Economist, where he claimed to have invented the phrase “priming the pump.”

“What’s it like working for that guy?” Cohn’s Wall Street buddy asked when he ran into him at their local diner.

Cohn smiled, or maybe gritted his teeth. “You can imagine,” he said.

After that: Russia, Comey, Kushner, Russia again, the $2 trillion error in the budget, Russia. “I thought they were supposed to make things better,” a source close to Team Competence moaned after Cohn expressed enthusiasm on television for the Republican health-care bill, which would strip health care from millions and defund organizations like Planned Parenthood.

A longtime Cohn friend simply recognized the hallmark talent of a man whose career was built around being a company’s No. 2 guy: managing up. “In general, if you work in a large organization, you support the leader,” he said. “No matter what he actually thinks.”

Meanwhile, very little was actually getting done. In mid-May, a judge found in favor of that Department of Labor rule. By that point, Cohn was focusing his energies on convincing the president to remain in the climate agreement, ahead of the G7 conference, which he and Team Competence had tightly organized so as to keep Trump in line. “His views are evolving,” Cohn told reporters in Italy. “He came here to learn, he came here to get smarter.”

Maybe it was this possibility of success that led Cohn to amble into the press area of Air Force One and start talking about coal. “It doesn’t even make that much sense anymore,” he told a reporter.

Après that, the deluge, as the Europeans say. Trump pushed around world leaders and failed to reassure NATO allies. Back home, he got into a Twitter war with the mayor of London. And meanwhile, Cohn’s comments had ignited outrage in coal country, home of Trump’s base. How much this affected Trump’s announcement to withdraw from the accord is unclear. But after the press conference in the Rose Garden, a photographer captured Cohn sitting with his head in his hand while a jazz band played “Summertime.”

A source close to Cohn suggests that his view of his opportunities within the administration have been evolving. “As with others in the West Wing who hoped to become moderating influences, it’s becoming increasingly clear that the president is utterly uncontrollable,” this person said. “At this point, are you helping? Or are you just enabling these highly controversial policies?” Or, no policies at all. “Just landed from China, trying to catch up … How did ‘infrastructure week’ go?” Blankfein trolled him on Twitter after a week of Comey testimony had blown up his agenda. The dream of “adulting” Trump may, in fact, be unworkable. So far, of all the people who have entered the administration hoping to manipulate the president, the only ones who have proved to be malleable are the would-be manipulators themselves.

Even Cohn — who, two days after the Rose Garden announcement, made an appearance on CNBC that can only be described as groveling. “We want to be in the coal business,” he said. His friends back in New York weren’t totally surprised. “It’s a bit ‘lay down with dogs, wake up with fleas,’ isn’t it?” says the society lady. Nor were those who have known Trump a long time. “I think as time goes on, you will see less butting of heads,” says Tom Barrack. “Because people will learn that in this administration, there is only one person that matters, and that is Donald Trump.”

*This article appears in the June 12, 2017, issue of New York Magazine.

Gary Cohn Profited From Mistakes. So Why Not Work for Trump?