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Male street: why Wall Street needs women
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Late last year, 20th Century Fox announced a sequel to its hit movie "Wall Street," and in so doing revealed the only untarnished brand left in financial services—the old boys' network. Whether virtuous, hard-working, dishonest, greedy, or half-hearted, men have and continue to dominate Wall Street.
There has been enough fiscal irresponsibility on the Street to know it will continue, just as we are likely to see in the "Wall Street" sequel. Since we do not trust political parties to resolve the problems they create, why do we continue to believe that a Wall Street dominated by men will resolve a financial crisis that originated there? To help prevent future meltdowns, what Wall Street needs is an increase in the influence of women. Now that is change we can believe in.
Women have already demonstrated their tendency to expose and confront poor fiscal conduct. Take Meredith Whitney, for example. Whitney, an analyst at Oppenheimer & Co. and Wall Street's current Cassandra, warned listeners years ago about the perils of subprime lending. These warnings were followed later by dire predictions about a coming economic crisis. In August, Whitney used her Fortune magazine cover story ("The Woman Who Called Wall Street's Meltdown") to predict an "early 1980's-style recession." Critics were skeptical, but so far, where it counts, she is batting 1.000.
Whitney foresaw the financial trouble, and other women have actively confronted corporate malfeasance. Sherron Watkins, a former Enron executive, was widely praised for warning former Enron CEO Kenneth Lay about internal accounting illegalities. Her less-celebrated colleague, Margaret Ceconi, went further, anonymously warning the SEC about the fraudulent activity. At WorldCom, Cynthia Cooper also exposed massive fraud and joined Watkins as one of Time magazine's People of the Year in 2002.
Women may be more comfortable issuing prophetic warnings because of their status as outsiders in the world of finance. According to Catalyst, women account for only 16.6% of corporate officers at U.S. finance and insurance companies; 83.4% are men. With so few women senior enough to observe and combat fiscal irresponsibility, women may simply have less to lose in male-dominate social settings than men. For women of color, this outsider status is doubled, because ethnically diverse women do not share the attributes of race or gender with those in power.
But being an outsider does have some advantages—one of which is that it allows women to infuse the Street with a healthy dose of dissent. This dissent does not flow naturally from any inherent differences between men and women, but rather from people's willingness to accept dissenting information from those who are visibly distinct. Even the ancients understood this: biblical prophets who lived without honor at home often found their messages received with gladness among foreign people in far away lands.
But women aren't exactly foreigners in the world of finance and women have a stake in the financial crisis that is equal to that of men. The National Association of Securities Dealers found that women account for 47% of all investors, and their buying power is approaching $4 trillion, according to Medelia, a women's consumer advocacy firm. Women also have a significant interest in the subprime mortgage market. Research by the Consumer Federation of America found that women were more likely to receive subprime loans than men across race, ethnicity, and income—even in some cases holding risk factors constant. Now that women account for 30% of all mortgage holders and the number of women-headed households has increased over the past decade, the impact of the current economic crisis on women is amplified.
This is not to suggest that women have more at stake than men, nor that they were the only ones who could see the financial storm brewing. Dr. Nouriel Roubini, professor of economics and international business at NYU's Stern School of Business (and a fiscal prophet in his own right) also predicted the current collapse. As did Michael Mayo, an analyst at Deutsche Bank, who started unloading bank stocks almost a decade ago because of his concerns about their over-reliance on asset-backed securities.
Further, though the vast majority of financial executives are men, there are certainly women who have turned a blind eye to illegal financial activities in past. Women are also not the only outsiders on Wall Street—men who view themselves as distant from the locus of power may be equally comfortable making waves. The idea that women can help prevent future market collapses does not need to turn into a "battle of the sexes."
Bottom line: Wall Street really does need "change." It needs sufficient gender and other types of diversity and dissent at levels of influence that will support the presence of multiple truth-tellers, male and female. We already know that predictions in small numbers are not likely to be believed, so the more Cassandras, so to speak, the better. Otherwise, the future of Wall Street will be like a movie we've seen before—and already know its ending.
Updated: 3/11/09
© 2009 Jessica Faye Carter. All Rights Reserved.
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