Where are the women of Wall Street?

Announcer: Welcome to Stuff Mom Never Told You from Howstuffworks.com.

Cristen: Hello, and welcome to the podcast. I'm Cristen.

Molly: I'm moneybags Molly.

Cristen: Moneybags Molly, all right. So, Moneybags, on March 29, 2010, there was a Women in Finance symposium.

Molly: Don't I know it.

Cristen: Yes. You are moneybags today. I can see the dollar signs in your eyes. Basically, it was just an event put together by the Department of Treasury in partnership with the White House Council on Women and Girls in celebration of Women's History Month. So they got together a lot of bigwigs from the finance world. Basically, they found the handful of C-Level finance execs who happened to also be women, and got them together in a room to talk about the state of women in finance. The thing that I was most surprised about with this event, Molly, was just kinda the lack of press coverage about it. The event was sort of a nonevent, except for I feel like the only press-worthy things that came out of this was a quote from Treasury Secretary Timothy Geithner in response to a question from a panel, an audience member, asking whether the financial crisis would have happened if women had been running Wall Street. Could women do a better job running Wall Street, essentially. He said, quote, "Well, that's kind of a low bar. How, you might ask, could women have not done better?" So people were saying, "Whoa, hey, Geithner is pro-women in Wall Street, that's great." Then he went on to point out that women make up a frighteningly small percentage of the executives on Wall Street, and a large part of the symposium was to try to reignite women's interest in going into finance.

Molly: Uh-huh. So let's talk about where are all these women.

Cristen: Yeah, because that question that was posed to Geithner at the symposium did come straight from a New York Magazine article that was published right around the same time entitled, surprise, What if Women Ran Wall Street?

Molly: Because there's some thought, I mean, as usual, with our podcast - there's some element of gender stereotypes that are going to play into it. Women are these levelheaded logical beings when it comes to money because, as a head of a household, they're going to make sure that their family doesn't starve, that everyone is well taken care of, and they're not as aggressive. They're not the risk takers. That's a man's thing. Men have historically taken care of the money. It's two different worlds, and can women really integrate into this world and become a force to be reckoned with on Wall Street? If they did, would the financial situation be better?

Cristen: Yeah. So Sheila Kohlatkar of New York Magazine really digs into this idea of the differences between men and women. She traces it all the way down to biology, namely hormones.

Molly: Hormones.

Cristen: Molly, one of our favorite topics here on Stuff Mom Never Told You.

Molly: We haven't talked about hormones in a while.

Cristen: We haven't. So let's say hello again to testosterone and estrogen. A lot of it goes back to the risk taking behavior fueled by testosterone. Obviously, you get on the floor of the New York Stock Exchange if you're a trader, and the men just go crazy. I mean, they're trading -

Molly: Competition.

Cristen: Yes, high competition, high stress, lots and lots of money at risk here. There have been studies tracing levels of testosterone and cortisone, which is a hormone that we release as - in response to stress. Researchers have traced how men's hormone levels, testosterone and cortisone levels, will shift during - as the market fluctuates, essentially, during a trading day.

Molly: Right. They're talking about, essentially, the influence of the environment on the testosterone. They're basically saying that if it's a guy who works maybe here for example, at Howstuffworks, he's just writing his articles, doing his podcasts.

Cristen: Uh-huh.

Molly: There's not a lot of aggressive behavior here. Sorry to disappoint.

Cristen: I don't know, Josh and Chuck, it gets a little hairy sometimes.

Molly: True.

Cristen: If you are in this very highly competitive stressful environment, that that's when testosterone levels are just going to surge.

Molly: There have been these studies that lead the researchers to conclude that risk taking and testosterone are linked and because women have less testosterone than men, then they will never have those risk taking abilities that the men do.

Cristen: Yeah. Supposedly, women produce 15 times less testosterone than men do, therefore, inhibiting our risk taking behavior. Terry Burnham is an economist and author or Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality. He's really looked into this testosterone financial risk taking connection. He found that the higher testosterone men are more likely to reject money that was offered to them if someone else was getting a larger share. So it's not only just this risk taking, but it's also this competition with the men around you. The idea of giving up money, just not accepting free money simply because, "I rejected $100 just because I knew you were going to get $200," is kinda ridiculous to think about. I think that's kind of a good example of the irrationality that does exist in Wall Street when you do have all of this financial risk at stake. He points out as well that a younger CEO, who therefore has a higher level of testosterone, is more likely to walk away from a merger even when the deal was in his company's best interest, just because there's that competitive, highly competitive cutthroat environment that stereotypical gender norms would say that women just aren't cut out for. We can't handle the pressure.

Molly: Well, Burnham points out that we might just have a role to play that's not being well used right now. He calls women the brake pedal. So that if you've got that young CEO about to walk off because he wants to prove that his pile of money is bigger than another pile of money, that a woman could be the person that having - he says - all right. Here's a quote, "Having too many men involved in business might cause them to take more risk and having more women would probably be good in lots of settings because they can act as this stopper."

Cristen: Well, and going along those same lines, John Coates is senior researcher fellow in neuroscience and finance at the University of Cambridge. He has really examined the behavior of stock traders. He says that these men will display clinical symptoms of mania. He says they're delusional, euphoric, overconfident, have racing thoughts and a diminished need for sleep. Essentially, they go insane for money. He feels like a lot of these volatile mood swings that happen are really a male phenomenon.

Molly: Right. He makes the case that it's dangerous to have males whose brains are so affected handling so much money.

Cristen: Uh-huh.

Molly: Which brings us to a pretty interesting figure in this New York Magazine article. Doug Hirschhorn, who calls himself a peak performance coach to Wall Street traders, he teaches both men and women how to make better decisions and avoid the destructive habits that can ruin the economy. It's sorta funny to read about the exercises he gives the men. I mean, they essentially - he has to tell them, like, "This is testosterone. You need to curb it. You need to journal. You need to go take a kickboxing class. You need to get out of your own head." It's almost sorta the advice you'd expect a woman to get.

Cristen: So on the flip side, the whole theory is that if there were more women involved in the higher levels in Wall Street, making the trades, pulling the levers, what have you, then they would balance out this kinda testosterone fueled insanity that led is to this crisis in the first place. She starts out the article by saying that people in the top tiers of the financial sector will tell you that in order to succeed you cannot let your emotions get the best of you. In fact, a lot of the behavior that caused the financial meltdown were fueled by very emotional responses to these very competitive men who didn't want to be seen as underperforming, who didn't want to be seen as not risk taking enough. If we had had more of a level headed woman who just simply doesn't have the same biological drives to be as aggressive, even if it's an incredibly stupid idea, then we'd be in much better shape than we are. Now, Molly, this is also - we have to take all this with a grain of salt. Obviously, a day trader's success doesn't just hinge on his levels of testosterone.

Molly: Right.

Cristen: Man or woman, obviously, you got to be smart and know what you're doing in order to succeed.

Molly: We're not male bashing here. We have no idea if there were a ton of women in charge on Wall Street if things would have been better.

Cristen: Yeah.

Molly: It's an unknown. Maybe it would have been the same. Maybe it would have been better, maybe it would have been worse, but you're right, there does need to be some intelligence in this, Cristen. Both men and women are going to business school. The rates of women enrolling in business school programs is on the rise.

Cristen: As of 2009, women made up 39.3 percent of fulltime students in American business school compared to 34.1 percent five years earlier, according to the Association to Advance Collegiate Schools. Now, Molly, let us contrast that to industry numbers once we get out of college, and this is according to the Harvard Business Review. Less than 18 percent of corporate officers and boards of directors at Fortune 500 financial services firms are females. So how did we go from making up almost 40 percent of the business school students to making up less than 20 percent of these high tier jobs?

Molly: So it seems to me that you can make that argument about testosterone and biology all you want, but when it comes down to it, it seems there is something very unfriendly in Wall Street culture to women. It's very hard to integrate into this old boys' club. We found one historical article from the '70s about how when the London Stock Exchange allowed women.

Cristen: 1971.

Molly: It was all about how this was the last bastion of masculinity finally being taken over. I mean, it's, for some reason or other, whether it's just that ancient idea that men handle money, men make the money, men deal with the money. It's been a very hard stereotype to break even hundreds of years later.

Cristen: Yeah. I mean, even in 1996 we have a huge class action lawsuit against Merrill Lynch when only six women were in charge at Merrill's 140 branches, which made up 4.3 percent of the total. Since the recession, there's also been a slew of sex discrimination cases at a lot of these larger financial firms from women who are saying that they have been unfairly treated because they have taken maternity leave or they have come back after maternity leave and wanted to breastfeed their child, or what have you. Basically, once they want to have a kid, they're screwed, and their job is slowly whittled away into nothing.

Molly: When there were all the layoffs after the recession, women faced a disproportionate number of them. Essentially, a lot of people got fired, but since women made up so few employees to begin with, it hit them a lot harder.

Cristen: So we have Zoe Cruz, who was ousted in November 2007 as Co President of Morgan Stanley. Then we have Erin Callan, who was demoted in June 2008 as CFO to the now bankrupt Lehman Brothers. Then finally, we have Sally Krawcheck who resigned in September 2008 as Chief Executive of Citigroup's Global Wealth Management Unit. Those three names come up again and again because, when they were first promoted to these C-Level positions, it was a big deal that finally women were starting to get a foothold in the financial sector. Then all of a sudden the recession hits and you have three of the lead women in the industry, all of a sudden, they're gone. Now some people have gone back and said, "Well, they were completely inept and shouldn't have been in those jobs in the first place," but I think it's kind of an example of what seems to be a gender imbalance in the firings that have happened as a result of the recession.

Molly: Because without naming names, it seems there are some inept men who kept their positions.

Cristen: Oh, yes, that's true.

Molly: To put it politely.

Cristen: To put it politely, yeah. Then even in the lower tiers, like I said, there have been all of these lawsuits that have come up that we read about in Forbes magazine. Again and again, these same types of situations were happening to women who had proven themselves as very able, high achieving employees who at some point would take the quote/unquote "off ramp" as it is termed, to have a child. Then they would come back and their job would be gone.

Molly: They keep calling it the off ramp, Cristen, but some of these women barely took the exit. They talked about one woman who was in labor and came to the office so that she could answer questions before she started her maternity leave. I mean, these women are going out of their way to make the situation work. They're not checking out for years at a time.

Cristen: No.

Molly: These are very brief maternity leaves. Then they'll come back to work and they just want the opportunity to breastfeed somewhere, and they're getting the runaround from the male bosses.

Cristen: Uh-huh. Even when these cases come up, a lot of women, understandably, are nervous about taking part in these class action law suits for fear of being ostracized in their job and the same thing happening to them. For instance, in this Forbes article, it talked about in the summer 2007 there was a $46 million class action settlement with Morgan Stanley on the basis of sex discrimination. Alice Hughes, who was one of the people who was helping to settle all of these claims, said that a lot of the women who could have cashed in on that $46 million suit chose not to say anything. She says out of, quote, "sheer fear," that even if they kept their jobs they might be excluded from benefits, like, getting a chunk of business when another broker left the firm. Then she goes on to say, "I mean, and they're right about it."

Molly: Yeah.

Cristen: "They probably made the right decision if they wanted to hang onto their job because even if they ended up leaving the company, they would be blacklisted from working at any other major firm." So while all this is going on though, Molly, I think we would be remiss to not mention though some of the women who are in very prominent positions in the financial sector, especially in government positions. For instance, we have Treasurer of the United States, Rosie Rios. We also have Federal Deposit Insurance Corporation Chairman Sheila Bair, who Fortune Magazine named as the second most powerful woman in the world.

Molly: That's pretty good.

Cristen: That's pretty impressive. Then we have Securities and Exchange Commission Chairwoman Mary Schapiro and Small Business Administrator Karen G. Mills. There are definitely - there are all these women. I mean, those are just government positions. There are also women in the higher ranks, obviously, at some of these major firms that we've mentioned, but there still seems like there's not enough women to sort of - between the C-Level and the entry level. To get those women up, get them from the off ramp, if they want to take it, back to the on ramp, provide mentorship and lead them through the trenches, and really close this gender gap on Wall Street.

Molly: Perfect.

Cristen: I rest.

Molly: So we want to hear from all of you on this issue, especially if you happen to work in finance. Maybe you can give us a viewpoint from the trenches of what it's like to have mentors, not have them, who you see, who you don't see. Does it suck?

Cristen: Yeah, I mean, because we're giving a very broad overview. I mean, the financial sector covers so many different types of firms and positions, and jobs. We're just giving a broad brush of the whole thing. So we welcome any more details you would like to share with me and Molly. Our email address is Momstuff@howstuffworks.com. Now we're going to read a couple of emails.

Molly: First up is one from Liz on our political quotas podcast. She writes, "I very much disagree with the idea of having these gender quotas anywhere, but especially in government positions. Our Congress may only be 17 percent women, which is obviously a smaller percentage than we make up in the general population, but I doubt Hispanics or African-Americans make up their share of Congress either. I don't have the stats to back that up, just a feeling. Why stop at gender? Are we going to break up the entire population into ethnicity, social standing, religion, income and then place quotas on each of these groups? I believe someone should be elected to office because they are absolutely the best candidate possible, not because there's a position to fill that matches their genetic makeup. The old white-haired men in Congress are probably not going to make it easy or encouraging for women, but that's not something a quota is going to fix."

Cristen: All right. Well, I've got one here from Bill. He says, "As a dad with three daughters and a lovely wife, I love your work and never miss an episode."

Molly: Thanks, Bill.

Cristen: "However, I have one admittedly nitpicky thing that drives me nuts. 'You guys' is a term that bugs me when addressed to a group that has females in it. I realize that it's very common these days, but I'm doing my best to stamp it. When we go in a restaurant as a family and we are addressed as 'you guys," I'm always tempted to say, 'There is only one me." So far, I've resisted that temptation." Probably a good idea, Bill. "It's very easy to simply drop the 'guys' portion. 'Are you ready to order?' sounds so much better than, 'Are you guys ready to order?" I realize this a little thing, but I had to do my part to rid the world of this annoying yet pervasive habit." I've go to say, Bill, I catch myself saying "you guys" all the time as well. That's why I think that Southerners have it right when we just say "y'all."

Molly: I agree. On that note, y'all can check out our Twitter. Y'all can check out our Facebook. Y'all can check out our blog and y'all can check out our home page, our home site, the people who pay our bills, Howstuffworks.com.

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