Would women have averted the bubble on Wall Street?
If women ran America's banks they couldn't have done worse, says Geithner
Tuesday 30 March 2010
A Wall Street run by women would be more focused on the long term and on the real-world consequences of its actions, a conference of the most powerful women in US finance heard.
At an extraordinary event at the Treasury in Washington yesterday, women from the top echelons of banking and government regulators assembled to debate how female influences might change the industry, and how to swell the numbers of women in senior management positions.
And hanging over the symposium was one much-discussed questions of the era: would a Wall Street run by women have avoided the credit crisis?
The most outspoken critique of the issues came from one of Wall Street's most outspoken critics, Elizabeth Warren, the academic appointed by Congress in 2008 to monitor the $700bn (£470bn) industry bailout, and who has been tipped as potential candidate to run a new consumer protection agency proposed by the White House.
She recalled a conference on financial innovation at the height of the credit bubble, when sub-prime mortgages were being sliced and diced on Wall Street into toxic derivatives that would ultimately infect the whole financial system. The credit crisis, she said, "began one lousy mortgage at a time".
"It was only the two women in the room who wanted to talk about what innovation meant at the household level, about the 'liar loans' and the credit cards nobody could understand, and all these tricks and traps," she said. "For everyone else, it was as if there was only one view, and that was at the macro level, about moving money all at once. But it is the household level which often is the driver of the economy, and the fallout for households was just not on the table." Ms Warren said it was time to "retrain ourselves" and stop feeling as if male voices carry more weight.
Introducing the conference, Timothy Geithner, the US Treasury Secretary, mused on whether Wall Street would be improved by having women in chief executive posts, something that has not so far happened at the major investment banks. "It is an excellent question, but kind of a low bar," he said. "How could women not have done better?"
Panellists yesterday also included Sheila Bair, head of the Federal Deposit Insurance Corporation, the main banking regulator, and Mary Schapiro, chairman of the Securities and Exchange Commission, the financial markets watchdog, as well as senior figures from Morgan Stanley, Citigroup and Goldman Sachs.
Abby Joseph Cohen, senior US investment strategist at Goldman Sachs, cited research showing women tended to be more thoughtful and take a medium term or longer-term perspective on investment decisions. "Some of the firms that emerged from this terrible crisis are the ones that had very strong internal processes, and people who said, 'Don't sell me a story here, I want to see the hard accounting.' I am very proud to say that at my firm the controller is a woman and the treasurer is a woman."
The event was broadcast live on the internet to students around the country, and the senior Wall Street figures also gave advice to young women examining a career in finance.
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