Rodge Cohen Discusses U.S. Bank Stress Test Results and Potential Effects of Brexit on Bloomberg TV

June 30, 2016

On June 30, Mr. Cohen appeared on Bloomberg TV’s <GO> to discuss U.S. bank stress tests results and the potential effects of Brexit on financial institutions in London. In the segment, “Stress Tests Show U.S. Banks Well Capitalized,” Mr. Cohen discussed how the bank stress test results released Wednesday revealed that U.S. banks are remarkably well capitalized and how U.S. bank capitalization requirements are likely to increase in the near future. He cautioned that high bank capitalization does not necessarily mitigate against loss. “Certainly there is a point at which there is too much capital, where banks cannot earn enough to attract investors,” Mr. Cohen said, noting that when capital requirements are too high, banks are driven to increase risk in order to earn. “If you go back into the 20th century and the 19th century, there is not a correlation between the highest capital levels and the lowest losses. In fact, it can be inverse.”

In the second segment, “Brexit Would Drive Institutions Out of London,” Mr. Cohen discussed whether Brexit will happen and where London’s financial institutions could reestablish themselves should there be a sharp break between the United Kingdom and the European Union. “Don’t act precipitously. There’s a lot yet to come and develop,” Mr. Cohen said by way of advice to clients wondering how to deal with the possibility of Brexit. “Do your planning. Think through what would happen in a worst-case basis, which is a total break, but it’s just premature to act.”