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by Vault Law Editors | March 13, 2009

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So Subprime Superman H. Rodgin Cohen has asked that his name be removed from consideration for the job of deputy Treasury secretary. But why?

According to ABC’s George Stephanopoulos, “an issue arose in the final stages of the vetting process.” The Washington Post reports the same mysterious “issue” which sources “declined to identify.”

The substance of the ‘issue’ is the source of some interesting speculation at Tom Blumer’s BizzyBlog:

Over the years, [Cohen] appears to have accumulated quite a list of bruised feelings, grudge-holding enemies, and politically problematic involvements. Taken as a whole, I believe they would have called into question not only his ability to oversee the banking and financial sectors impartially and in the country’s best interests, but also the degree of support he would have had from his own party if he were to stumble even slightly…[Cohen is] a man who was on the cutting edge of a historic wave of consolidation in the banking industry, something populist Democrats and perhaps even some Republicans would have found hard to swallow in Treasury’s second-in-command.

Blumer cites the October ’08 Wall Street Journal piece, “A Lawyer for All Wall Street Navigates Tempestuous Times,” to support the provocative notion that Cohen is the “man who may, as much if not more than anyone else, be responsible for why the banking business is in its current condition.”  From the Journal article:

Mr. Cohen is also in demand because he helped mold the financial system that is now under assault. He helped draft the rules that led to the emergence of powerful national banks, waged the first hostile bank takeover in the U.S. and lobbied, in the early 1990s, to expand the Federal Reserve’s power to provide the emergency loans now being employed by the government.

But Mr. Cohen’s immersion in the banking system also has at times put him in a difficult position. As he jumps from one client to the next, it is sometimes hard to tell whom he may be representing at a given moment.

In any event, there remains a gaping hole where Treasury’s No. 2 ought to be.   Gus O'Donnell, Cabinet Secretary for the British government, complained this week that it is "unbelievably difficult" to communicate with the Treasury Department: "There is nobody there."

-posted by brian

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