Skip to main content


April 6, 2017

A Huge Warning on Gary Cohn’s Surprising Statement on Glass-Steagall and the Unique Benefits For Goldman Sachs

Thursday, April 6, 2017
Contact: Nick Jacobs, 202-618-6430 or

Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued the following statement following comments by NEC Chair Gary Cohn in support of restoring a Glass-Steagall-like financial protection:

“We welcome NEC Chairman Gary Cohn’s reported possible support for restoring a Glass-Steagall-like structural protection.  Eliminating Glass-Steagall in the 1990s super-sized financial firms, encouraged and enabled unacceptable risk taking, and created innumerable dangerous and fragile too-big-to-fail financial firms.  These changes created the conditions that led to the 2008 financial crash.

“If accurate, Cohn would join a bipartisan chorus who understand that again separating investment banking and trading from commercial, residential and personal lending could be a significant step in reducing the ongoing risk from too-big-to-fail financial firms. 

“However, with the White House being referred to as ‘Goldman Sachs South,’ people need to be mindful that there are numerous ways that a Glass-Steagall-like change could be done that would increase systemic risk, create unregulated too big to fail firms and put taxpayers on the hook for much bigger bailouts in the future.  For example, it could recreate the dangerously un- or under-regulated shadow banking system that existed before the crisis.  This could incentivize unacceptable risk taking and moral hazard because financiers would again have a ‘put’ on the taxpayers, knowing that, like 2008, even smaller institutions like pre-2008 investment banks Bear Stearns or Lehman Brothers won’t be allowed to fail in the future.

“Most troubling about Mr. Cohn’s possible embrace of Glass-Steagall is the potential benefits that would be uniquely enjoyed by his former firm, Goldman Sachs.  The prior standalone investment banks like Goldman have had to change the most due to the post-crash rules to reduce or eliminate their highest risk and most dangerous activities.  This has hurt their prior unregulated high-risk, high reward business lines, revenues, bonuses and competitive position while requiring them to move into new, less lucrative business activities. 

“This was all necessitated by the extraordinary special bailouts provided in 2008 to Goldman and the only other then-existing freestanding investment bank, Morgan Stanley.  Within days of Lehman’s 2008 collapse, both banks were on the verge of bankruptcy, with Goldman admitting it was ‘toast’ unless immediately bailed out by the government.  They were allowed to convert virtually overnight to bank holding companies, giving them full access to innumerable routine and extraordinary rescue and bailout programs set up by the Federal Reserve. 

“This unprecedented action, which disguised and concealed the largess showered on Goldman, contradicted the very foundation of many decades of pre-crash regulation:  bank holding companies enjoyed the full benefits of government support, but in exchange were heavily regulated to protect taxpayers.  Investment banks like Goldman were not heavily regulated because there were supposed to be no circumstances under which they could get access to  taxpayers’ pockets. 

“Thus, Goldman enjoyed decades of little to no regulations and the supersized profits from high risk activities that bank holding companies were not permitted to engage in, until Goldman got the best of both worlds: the pre-crash bonuses and the post-crash bailouts that were supposed to be limited to highly regulated bank holdings companies. 

“A Glass-Stegall-like change done wrong could move Goldman back to the investment and trading side of light regulation, boosting its profits, business lines and competitive position.  Thus, once again it would be king of the financial world where bank holding companies couldn’t compete.  While there are provisions in the Dodd Frank Act designed to prevent this from happening, the Trump administration has already targeted them for elimination.  Thus, taxpayers would be on the hook again just as they were in 2008 for a largely unregulated bank that takes the biggest most dangerous risks because it knows that, if another crash happened, they would be bailed out again.

“While we’d like to take ‘yes’ for an answer on restoring a real Glass-Stegall-like law, everyone should very carefully scrutinize the details of any actual proposals to ensure that the public is being protected rather than the profits of Wall Street’s biggest firms which are overly represented among those who will be drafting and promoting any such change.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit



For media inquiries, please contact us at or 202-618-6433.

Contact Us

For media inquiries, please contact or 202-618-6433.

To sign up for our email newsletter, please visit this page.

This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

"* (Required)" indicates required fields

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact or 202-618-6433.


Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today