The most powerful posts in the financial world are held by women. Janet Yellen chairs the US Federal Reserve, and Christine Lagarde is managing director of the International Monetary Fund. Mary Jo White heads the US Securities and Exchange Commission, and was preceded in that job by Elisse Walter and Mary Schapiro. America’s new Consumer Financial Protection Bureau is directed by a man — but the reason is that the industry feared Senator Elizabeth Warren would fill the role too effectively.
All of these posts are public appointments. And all of them are paid annual salaries that would insult the bonus expectations of a Wall Street trader (the best remunerated is the IMF position, which pays about $500,000). Senior jobs in private-sector finance are taken almost exclusively by men.
There are women in the C-suite, to be sure, but mostly as receptionists. A few are to be found in non-executive roles. Their performance has not always impressed; Rona Fairhead has been excoriated by the public accounts committee for ineffectiveness as chair of HSBC’s audit and risk committees. At Barclays Alison Carnwath attracted opprobrium, principally as a result of her inability to contain the pay demands of Bob Diamond, then chief executive, when she chaired the bank’s remuneration committee. (One-third of shareholders in Man Group, the asset manager where she also holds a directorship, subsequently voted against her reappointment there — one of the loudest such protests on record.)
No one doubts Ms Yellen and Ms Lagarde secured their demanding jobs on their own merits. But it is hard to avoid a sense that some of these non-executive figures are there to meet political demand for female appointments rather than for their skills . The term “golden skirts” is used to describe the figures who fill Norway’s mandatory quotas for female directors by flitting from boardroom to boardroom.
The women who have made it to the top in banking did so in unusual circumstances. The most senior woman is Ana Botín, executive chairman of Spanish bank Santander. While she has a record of considerable achievement in the financial world, it is not irrelevant that she succeeded to her position on the death of her father. The same cannot be said of Birna Einarsdottir, chief executive of Islandsbanki and one of several women sent in to sort out the financial system (and the country itself) when Iceland’s banks collapsed in 2008.
Women have reached the summit of other “boys’” industries — both General Motors and IBM now have female chief executives. What makes banks different? There may be a clue if we look more widely at the finance sector. A list of the principals of the 50 biggest hedge funds contains exactly one female: Sonia Gardner of Avenue Capital. There is only one criterion for employing a hedge fund manager: whether or not this person will trade profitably. Why, then, so few women?
Simple justice, and the folly of excluding any qualified person, argues against discrimination on grounds of gender (or anything else). But perhaps men and women bring rather different qualities to finance. Cambridge neuroscientist John Coates (himself a former Wall Street trader) emphasises the link between testosterone and risk taking. The surges of testosterone and cortisol he observes as traders are gripped by excitement and depressed by loss are not observed in the same way in women.
This is perhaps a hormonal explanation of why men are drawn to the risk-taking functions in finance while women are engaged in regulating and organising. We might have better banks if there was rather less male risk taking and more female regulating and organising. Time, perhaps, for more women to be employed in executive roles in financial institutions.
This article was first published in the Financial Times on March 18th, 2015.