Bestselling author and investigative journalist William Cohan gave an insider’s look at the world’s current financial crisis at Cal State Long Beach’s third annual Distinguished Speakers Series at the Carpenter Performing Arts Center on Wednesday.
The former senior investment banker discussed how and why the 2008 financial meltdown happened, which is the subject of his book “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.”
Cohan’s book recounts the collapse of Bear Stearns, which was purchased by JP Morgan Chase on March 17, 2008, for $2 a share. Cohan said he began writing the book that very day.
“Over the next eight months, which has to be some sort of crazy record, I wrote this book, interviewed hundreds of people, reviewed thousands of documents and finished writing it on Dec. 1, 2008,” Cohan recalled during his address.
Cohan said he felt it was his mission to get a response to questions left unanswered by Wall Street CEOs.
“I have to confess that when I first started writing the book, I felt a bit like an ambulance chaser, which is not at all what an investigative reporter wants to feel like,” he said. “But I knew I had a mission and I had to tell this story, and that meant diving into the situation.”
Cohan disassembled the story in his book for the audience, getting to the core of his mission. He said he thinks public companies on Wall Street should revert back to when they were private partnerships, a time when CEOs “had skin in the game,” meaning their entire net worths were at stake.
“I think that ethos, the mores of Wall Street, changed when they went public,” Cohan said. “Then all the sudden, these firms had to live quarter to quarter.”
During the panel discussion, Cohan was asked if he had any solutions to this problem.
“The only solution I have is to have one of the litmus tests for the CEO on Wall Street be ethics, and moral character and fiber, and the ability to take responsibility for your actions,” Cohan said.
Another question from the audience asked whether or not Bear Stearns should have been left to fail with no governmental intervention. Cohan responded, saying, “While I wouldn’t have had as good of a story to tell, I think they should have let Bear Stearns fail. Yes, we need regulation because what we’ve seen in the last 25 years is sort of this tendency toward this hands-off, laissez-faire behavior with Wall Street securities firms.
“The more I think about it, had they let Bear Stearns fail, had they not bailed out the creditors, had they not given shareholders $2 to $10 a share, the market would’ve gotten a loud signal and message.”
Cohan said that message was that the companies on Wall Street are not too big to fail, and that CEOs need to be held accountable for company action.
“This country was not built on people slithering away from responsibility,” Cohan said. “It was built on quite the opposite.”
Cohan’s award-winning book is available at the University Bookstore in hardback for $30.68. For more information on the Distinguished Speaker Series, visit www.distinguishedspeakerseries.com.