I think FFC and Puzo overdid Genco's cowardice in that scene, much as they overdid Fredo's stupidity in GF and II. But there was a point, ultimately, to both. In Genco's case, his fear of Fanucci (and the reluctance that Clemenza and Tessio showed in taking him on) underscored that Fanucci was really a wimp, and that his reputation as a "Black Hander" was just so much bluff. His character was historically accurate: in immigrant neighborhoods (not just Italian neighborhoods), individuals and small groups of toughs often invoked the name of feared organizations in the Old Country to terrorize the locals. But they had little real strength. Vito saw through the bluff. In Fredo's case, his weakness and stupidity led, in a complex way, to his betrayal of Michael, to the unforgettable outburst in the boathouse, and to his death at Michael's hand.