William Cohan, a veteran Wall Street observer and author, has expressed concerns about an emerging bubble in artificial intelligence investments and the broader risks facing the financial sector under the Trump administration. Speaking during a recent discussion in Manhattan, Cohan criticized the economic environment fostered by former President Donald Trump, describing it as marked by favoritism and instability that could have lasting negative consequences for the US economy.

Cohan, 66, who spent 22 years working in banking before transitioning to writing, highlighted that despite current market highs and robust activity in IPOs and mergers and acquisitions, the optimism on Wall Street feels fragile. He stressed that much of the dealmaking has been buoyed by a relatively relaxed regulatory stance during Trump’s tenure, yet warned that the enthusiasm around AI-related stocks may be misplaced. “It’s going to be a disaster,” Cohan said, emphasizing the potential for a market correction that could have serious ripple effects, particularly if it spreads to debt markets.

Drawing on his extensive experience, including surviving the financial shocks of Black Monday in 1987 and the post-9/11 downturn that ended his banking career, Cohan pointed to underlying vulnerabilities such as the United States’ $40 trillion government debt and rising bond yields. These factors, combined with inflated valuations in the AI sector, have led him to predict that Trump’s economic legacy could be one of the worst in modern American history.

Cohan also addressed Wall Street’s cautious engagement with the AI boom, noting that investment banks like Goldman Sachs and Morgan Stanley benefit financially through underwriting fees while minimizing their exposure to post-IPO market performance. He used SpaceX’s recent IPO as an example, where banks earned substantial fees despite the stock’s later decline, and anticipated similar outcomes from upcoming offerings, such as the planned IPO of AI company Anthropic.

Beyond market dynamics, Cohan’s new book, *Money to Burn*, explores the rise of private equity and private credit, with a focus on firms such as Apollo Global Management. The narrative traces Apollo co-founder Leon Black’s career, including his association with controversial figures like Michael Milken and Jeffrey Epstein. While an internal investigation found that Black paid Epstein $158 million for financial advice, the precise nature of these payments remains disputed. Cohan noted the difficulty in reconciling such large sums with the typical fees charged by top financial firms but acknowledged the absence of definitive proof of wrongdoing.

Reflecting on Epstein’s influence, Cohan suggested that he exploited the insecurities of wealthy men willing to engage in questionable arrangements. He also discussed Black’s personal controversies, including a costly blackmail allegation connected to a former Russian model, illustrating how even successful financiers can falter with poor personal decisions.

Cohan concludes his analysis with a cautionary message about the volatility inherent in Wall Street’s current climate. He warns that despite the recent surge in private capital, warning signs are emerging and that the financial industry’s exuberance may soon give way to significant challenges. “These animal spirits are just running wild,” he said, underscoring the precariousness of the present market environment.