Wall Street Has Never Had a Woman CEO. Why Not?

Things did not look right to Rep. Al Green (D‑Texas).

It was April of this year, three hours into a grilling of the CEOs of seven of the largest U.S. banks before the House Financial Services Committee. The hearing was to focus on the accountability of the banks, 10 years after the financial crisis. 

But Green, an eight-term congressman representing parts of Houston, had decided to discard his prepared questions and pursue a different line entirely. Looking across the row of CEOs—Michael Corbat of Citigroup, Jamie Dimon of JPMorgan Chase, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America, Ronald O’Hanley of State Street Corp., Charles Scharf of Bank of New York Mellon, and David Solomon of Goldman Sachs—he put it bluntly.

“The eye would perceive that the seven of you have something in common,” Green said, slouching over his microphone. “You appear to be white men. You’ve all sermonized to a certain extent about diversity,” he continued. “If you believe that your likely successor will be a woman or a person of color, would you kindly extend a hand into the air.” Taking a physical tally is a common exercise for Green—he likes the optics of it.

No CEO raised his hand; in fact, the panelists flinched a little, like schoolboys caught misbehaving. “I know it’s hard to go on the record sometimes,” Green said. “But the record has to be made. All white men and not one of you appears to believe your successor will be a female or person of color.”

Even as diversity initiatives and the #MeToo movement work to recalibrate corporate power dynamics across a range of industries and workplaces, Wall Street has remained terra incognita for women trying to reach the highest rung. “In theory, this is an analytical business, and what should matter here is performance. And yet in the most analytical of industries it hasn’t mattered,” says Sallie Krawcheck, cofounder and CEO of Ellevest and once one of the highest-ranking women on Wall Street. The question of why a woman has never run a Wall Street bank is “not a new question,” adds Wendy Cai-Lee, now CEO of Piermont Bank, who worked at both JPMorgan Chase and Citi. It’s one “we constantly ask ourselves.” 

It’s especially striking given that industry after industry has seen the ascension of a female CEO: BAE Systems’ Linda Hudson in defense in 2009 (to be followed by many others), General Motors’ Mary Barra in autos in 2014, Occidental Petroleum’s Vicki Hollub in oil in 2016, and GlaxoSmithKline’s Emma Walmsley in pharma in 2017. Women have ascended to the top ranks of banks overseas; indeed Ana Botín is the chairman of Banco Santander. Fortune started tracking female CEOs on the Fortune 500, which ranks firms by gross revenue, in 1998. Since then it has identified only two female bank CEOs. The first was the late Marion Sandler of Golden West Financial, which she founded with her husband and was bought by Wachovia in 2006. The second is Beth Mooney, CEO of KeyCorp, a regional bank based in Cleveland, which ranked No. 413 on this year’s Fortune 500. 

It’s not all bad news. Outright sexual harassment, the type that turned mostly male trading floors into petri dishes of misogyny decades ago, is less commonplace. Leaders have avowed the need to be inclusive and have tweaked recruiting machinery to nearly achieve gender parity among starting classes. The obstacles that remain are the smaller, more subtle barriers that range from “microaggressions” to “over-mentoring” and “under-sponsoring.” Fortune interviewed more than a dozen women who are veterans of banking and finance for this story. Some didn’t want their names used because they wanted to speak candidly about former employers. But their stories shared common threads of the cultural factors that are keeping the boys’ club in place. 

What they told us? Women want to be CEOs but are deemed not quite ready. Boards and shareholders say they want diverse leadership, but just can’t quite seem to find the right candidates once the top job opens up. All told, Wall Street finds itself at a standoff. 

The irony is, this particular glass ceiling looked as if it might soon be broken—over a decade ago. Back in the mid-2000s, Zoe Cruz was copresident of Morgan Stanley and was seen as a possible successor to CEO John Mack. In late 2007, Erin Callan had ascended to CFO of Lehman Brothers at age 41. And Krawcheck had a stellar string of successes at smaller firms—even landing on the cover of Fortune—before being named CFO of Citigroup. 

“The Sallie, Zoe, Erin trifecta,” Krawcheck recalls. “We were the three senior ones.” 

The financial crisis, however, upended the careers of all three women. Cruz left in November 2007, shortly after Morgan Stanley’s write-downs related to the subprime mortgage crisis. Callan resigned in June 2008 after Lehman posted a $2.8 billion quarterly loss; the firm filed for bankruptcy three months later. Krawcheck, meanwhile, departed Citi in 2008 over disagreements with the CEO; the next year she took a job running Merrill Lynch’s global wealth management unit, but she left that position two years later.

It’s logical to think, says Krawcheck, that the global reshuffling precipitated by the crisis would have caused the industry “that’s been white, male, and middle-age” to reconsider the demographics of its leadership. Instead, as Krawcheck puts it, “it became whiter, maler, and middle-age-er.” And the fact that the crisis itself seemed to have been precipitated by a particularly, ahem, testosterone-driven style of risk-taking and decision-making did not necessarily sink in in some circles. As Christine Lagarde, the former managing director of the International Monetary Fund, has famously opined: If Lehman Brothers had been “Lehman Sisters,” the economic crisis “clearly would look quite different.”

BEN BAKER—REDUX

WESLEY MANN—AUGUST

SPENCER HEYFRON

Indeed, there’s a case to be made that Wall Street needs more women at the top. 

A 2018 IMF study identified the benefits of female leadership of banks worldwide, at least at the board level. It found that institutions with larger shares of women directors had higher capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress. The same relationship exists between bank stability and the presence of women on banking regulatory boards. “We find that the observed higher stability is most likely due to the beneficial effects of greater diversity of views on boards,” the authors write. They also note that due to discriminatory hiring practices, women who reach the board level tend to be “better qualified or more experienced” than their male peers. All told, the evidence “strengthens the case for closing the gender gaps in leadership positions in finance.”

That argument seems to have registered with megabanks’ current CEOs, or at least they indicate so publicly. All seven who attended the April congressional hearing submitted prepared remarks mentioning their bank’s diversity efforts, with some acknowledging that progress is still needed. Diversity is “essential to … driving responsible growth,” said Bank of America’s Moynihan. Bank of New York Mellon holds “executive committee members and hiring managers accountable” for achieving workforce representation goals, said CEO Scharf. 

State Street CEO O’Hanley’s remarks on the matter were by far the sharpest. He said the firm stepped up its diversity efforts, in part, because the financial crisis “cast a bright light on the dangers of groupthink in corporate leadership.”

But as women well know, what happens to a decades-long career inside an institution isn’t the result of big proclamations. It’s the result of a thousand tiny interactions and decisions. Some her choice, some not. Some assignments not offered, some cocktail parties not attended, some business trips not booked. 

We know this. Out of college, women start—at least on paper—on equal footing on Wall Street. (For the purposes of this article we looked at the problems of gender parity; our sources stressed that other kinds of diversity—of ethnicity, economic background, sexuality, among others—are equally important to address.) Women now account for 51% of entry-level jobs in banking and consumer finance, according to 2018 research by McKinsey that surveyed more than 14,000 employees at 39 financial services firms. By the time you get to the C-suite that number is 20%.

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