William D. Cohan, a former senior Wall Street M&A investment banker and New York Times bestselling author, told Daniels students that Wall Street can be soul crushing. Cohan was the guest of the School of Accountancy’s sixth Town Hall event Oct. 24 in the Reiman Theater at the University of Denver.
More than 100 students, faculty, staff and community members showed up to listen to the Q&A moderated by Gordon Yale (MAcc 1977), principal of Yale & Company, a Denver-based forensic accounting and financial consulting firm, and member of the School of Accountancy Advisory Board.
Yale asked Cohan if America’s great banks could be controlled by anyone. That happens to be the topic of Cohan’s newest book Why Wall Street Matters, which comes out in March. Cohan’s message was that Wall Street is certainly controllable.
“People are simple. They do what they’re rewarded to do,” he said. “The problem is that Wall Street is no longer accountable for its actions.”
Cohan explained that for first 175 years of its existence, Wall Street was made of a series of private partnerships. Firms went out of business if they didn’t invest wisely. As a result, they cared about risk taking. But, in 1970, Donaldson, Lufkin & Jenrette (DLJ) became the first wall-street firm to go public, changing the whole dynamic on Wall Street.
“We went from a partnership culture to bonus culture,” he said. “To me if you want to manage people better, you have to control their behavior and change the compensation structure on Wall Street.”
Cohan said he’s been advocating for this for years. He wrote a column in The New York Times in 2009 and hopes his new book will raise the issue again.
“My view is that if Wall Street doesn’t do it themselves, someone else is going to do that to them,” he said. “They’d be much better off if they do that for themselves. It could be a huge differentiator and marketing opportunity.”
Cohan shared the stories of ethical people who worked on Wall Street, notified their superiors about wrongdoing, and were fired. Despite that, he wouldn’t advise student to avoid working in Wall Street as long as they go in with their eyes open.
“If you can’t be happy with yourself, you just have to leave. It can be soul crushing. Being ethical and moral is much more important than the money they’re paying you,” he said. “As long as you recognize that you’re not going to be one of the lucky ones who gets into the C-suite. As long as you recognize that and don’t live beyond your means. Save it and conserve it; that’s how I subsidized my writing career.”
Cohan is the author of The Price of Silence, Wall Street: Money and Power: How Goldman Sachs Came to Rule the World, House of Cards: A Tale of Hubris and Wretched Excess on Wall Street and The Last Tycoons: The Secret History of Lazard Frères & Co.
He is a contributing editor at Vanity Fair and writes a weekly opinion column for Bloomberg View. He also writes for The Financial Times, Bloomberg Businessweek, The Atlantic, Art News, the Irish Times, The Washington Post and the New York Times Magazine.
He also appears regularly on MSNBC, on Bloomberg TV, where he is a contributing editor, and on CNN, Current TV and the BBC-TV. He is a graduate of Duke University, Columbia University School of Journalism and the Columbia University Graduate School of Business.