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New sheriffs get ready to handbag Wall Street

Women Wall Street | New sheriffs get ready to handbag Wall Street Anthony Harrington

At a recent presentation, US Treasury Secretary Timothy Geithner began by saying he’d recently seen a headline: “What if Women Ran Wall Street?” If they did, they could hardly do worse, he quipped. The fact is that following the crash and the US legislature’s new appetite for reform, the number of women in key regulatory positions is on the rise. So much so that Time magazine recently ran a feature by Michael Sherer entitled “The New Sheriffs of Wall Street.” Sherer focused on three women, Sheila Bair, the chair of the Federal Deposit Insurance Corporation, which has responsibility for safeguarding depositors accounts, Mary Shapiro, the first woman to hold the chair of the Securities and Exchange Commission, and Elizabeth Warren, chair of the panel overseeing the US Troubled Asset Relief Programme (TARP).

All three women have already proved themselves to be formidably competent, a quality that seems to have been sorely lacking amongst regulators through the crash. As Sherer notes, “these women may not run Wall Street, but in this new era, they are telling Wall Street how to clean up its act.”  Moreover they are not alone. As Sherer points out:

“… three of the five SEC commissioners are women; the head of the White House Council of Economic Advisers is a mother of three; and in the Senate, women have been leading the charge for tougher regulations. Arkansas Senator Blanche Lincoln stunned the banks in April with tough derivatives regulations that she announced in a letter to a small group of mostly female Senators, who fought beside her to include the language in a final bill.”

In fact if you go through the various amendments to the US Finance Bill, many of the amendments come from or are co-sponsored by women senators. Some women will shrug and say, “men mess up, women clean up, what else is new?” Actually, it is hard to push the gender issue here very far without falling into a world of trouble, unless you believe that the female sex is innately less prone to “irrational exuberance” than the male sex, which is probably not an easy belief to subject to any kind of rigorous test.

What is more interesting is the idea of “a fresh pair of eyes,” or multiple pairs of eyes, scrutinising the goings on of Wall Street. The changed times, characterised by a new reforming and regulatory zeal, favour anyone, male or female, who is (a) not already a Wall Street insider and (b) has the courage to challenge the status quo. This is what has really changed post the crash. It may be a temporary change, and probably is—certainly it will be highly temporary if Wall Street has its way. But right now there is an attitude that is, at the very least, not totally hostile to far reaching change.

To see how different matters were a few years ago, consider the Washington Post’s account of the crash, written in October 2008. The Post’s editorial team point out that another woman, Brooksley E. Born, the head of the Commodities Futures Trading Commission, took on the formidable trio of the Federal Reserve Chairman, Alan Greenspan, the Treasury Secretary Robert Rubin and SEC Chairman Arthur Levitt Jr., all Wall Street legends at the time. In 1998 Born, a former litigator at a high powered Washington law firm, wanted to see derivatives—a prime ingredient in the coming crash—subjected to much tighter regulation.

Today the whole of the US Administration is singing off this hymn sheet. In 1998 however, Born was just one lone female voice warning that the enormous—and burgeoning—derivatives market was out of anyone’s control and needed to have a strong regulatory light shone upon it, and that right speedily. She was, of course, shouted down. The rest, as they say, is history….

Further reading on Regulation and Derivatives

Tags: derivatives , EU , gender equality , regulation , US
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