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Financial Crisis Has Been Brutal to Top Woman Executives

The latest casualty: Ina Drew, the head of JPMorgan Chase's chief investment office, who departed last week after the bank suffered mammoth trading losses.

The financial crisis and its aftermath have been brutal for Wall Street's richest and most powerful women. The latest casualty: Ina Drew, the head of JPMorgan Chase's chief investment office, who departed last week after the bank suffered mammoth trading losses.

An analysis by Reuters of the proxy statements from the five largest U.S. banks shows that of the 25 executives whose pay is disclosed - updated for some recent changes - only three, or 12 percent, are women. That's down from five, or 20 percent, at the end of 2007.

At the three biggest banks - JP Morgan Chase & Co, Bank of America Corp and Citigroup Inc - there is now only one woman in the upper echelons: JP Morgan Chase's asset management chief, Mary Callahan Erdoes. At the end of 2007 there were two.

Among the top 10 banks, the aggregate numbers are a little better, but the percentages are not. Five women, or 10 percent of the 50 executives identified, are in place, down from six, or 12 percent, in 2007. Only three managed to hang on through the crash and continue on in their jobs: Morgan Stanley's chief financial officer, Ruth Porat; Wells Fargo's senior executive vice president of community banking, Carrie Tolstedt; and U.S. Bancorp's vice chairman of payment services, Pamela Joseph.

Drew's departure followed JP Morgan Chase's disclosure of more than $2 billion in losses at the chief investment office. She was one of the best-paid executives at the bank, earning $30 million over the past two years.

Drew is hardly the first top woman executive to take a messy and public fall since the trough of the financial crisis in 2008.

For many, a pivotal moment came when the glamorous and flashy Erin Callan, who somehow made the wonkish job of chief financial officer both hip and stylish, became the first of the Lehman Brothers executives to go in June 2008.

Callan's departure occurred about three months before the firm came tumbling down, triggering the financial crisis.

Since then there have been a series of flameouts. Women who were once anointed as the most powerful in finance, the would-be heirs to the CEO suite, were fired or forced out.

Just three months after Callan's exit, Sallie Krawcheck - widely lauded as the top woman in banking - learned via BlackBerry during a Citigroup retreat at the plush Phoenician resort near Phoenix that she was being stripped of her duties as Citigroup's head of global wealth management. Her parting was so discordant it was dubbed a divorce by the press.

Krawcheck soon joined Bank of America in the same position. Two years later new Chief Executive Officer Brian Moynihan moved her out, even though her operation was profitable.

This, after Moynihan had overseen the departure of the bank's other top two female executives, mortgage head Barbara Desoer and global risk chief Amy Woods Brinkley.

"We still have a long way to go to change the culture," says Harvard Business School Professor Rosabeth Moss Kanter. "But let's not look at any one woman and say they fired her because she was a woman, because they didn't."

J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo & Co, U.S. Bancorp, Capital One Bank and PNC Bank all said their corporate corridors and talent pipelines were filled with talented, high-ranking women who report directly to their CEOs. They also said that a gender breakdown of their top earners was not the best way to measure how much female talent they had.

"We have a significant number of women in top leadership positions, including nearly 40 percent of direct reports to the CEO, and others who run businesses that by themselves compare with Fortune 500 companies," said Bank of America spokesman Scott Silvestri.

Wall Street is a savage place. For women and men. But the departure of top executives has raised age-old questions for women who work there, and for those who observe them.

Before the financial meltdown there was a sense that hiring was becoming more equitable. It no longer feels that way.

Some experts, such as economist Sylvia Ann Hewlett, director of the Center for Talent Innovation as well as the Gender and Policy Program at Columbia University's School of International and Public Affairs, argue that women who choose to have children either opt to take, or are forced to take, off-ramps in their jobs because their prime career-building years coincide with their prime child-rearing years.

Others subscribe to the "glass cliff" theory proffered by University of Exeter Professors Michelle Ryan and Alex Haslam: Companies push women up the ranks, then promote them too fast and too far. Failure is inevitable, and the perception that women can't do the job is thus fulfilled. A self-reinforcing, negative feedback loop ensues.

Yet women now earn 57 percent of bachelor's degrees and are 60 percent of graduate students.

The workforce also continues to change. Women now make up more than half the managerial class. Almost 40 percent of working wives now outearn their husbands, according to Liza Mundy, author of the recent book "The Richer Sex."

Mundy predicts that the Big Flip - the day when women will outearn men - will soon be upon us.

The recent rash of female departures on Wall Street may make it seem like progress is being erased.

Strangely, that's not the case.

"I actually think, in an ironic way, it's progress that women are judged on performance grounds," says Kanter. "We are going to see some women succeed beyond belief and some women who get caught in a crisis of their own making. But stay tuned. Ina Drew won't be the last person to lose their job from JPMorgan Chase." (Reporting by Michelle Conlin; Editing by Prudence Crowther and Douglas Royalty)

Copyright 2010 by Reuters. All rights reserved.

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