What Is Happening to Women on Wall Street?

As yesterday’s Glass Hammer posting by Zoe-Cruz-not-the-Zoe-Cruz noted, these are tough times for women on Wall Street. Indeed, as a recent posting on the New York Times Dealbook website noted, Zoe Cruz’s forced transition into early retirement from her job heading up trading and risk operations at Morgan Stanley may have quietly heralded the end of an era.

What era? For the first time in history, the future looked bright for women on Wall Street. Zoe Cruz was the most senior woman on the Street, but examples of high flying female power brokers were increasingly more common. At a fundraiser last year for a women’s rights organization, I heard Sallie Krawcheck, Citigroup’s former Chief Financial Officer, speak passionately and convincingly about her road to success, the tradeoffs she made in her life on the way to “having it all,” and her enduring commitment to charitable causes. I remember feeling an almost giddy sense of jubilation and possibility, hearing her remarks and thinking that this life of professional success, family fulfillment and passion for public service could be mine one day too.

So you can imagine how I must have felt when I heard that Ms. Krawcheck was demoted from her top position at Citi in January 2007, where she had been widely been rumored to be the heir apparent to now-deposed CEO Charles O. Prince III.

According to the same NYT Dealbook posting, Ellyn McColgan, president of distribution and operations at Fidelity also stepped down in August 2007, when she previously had been seen as a likely successor to Chairman and CEO Edward C. Johnson III.

Maybe its just a coincidence that these high profile women have departed in the same year, and they are not being targeted as women-qua-women, but only being held responsible for the economic woes of their companies the same way that men in top positions are. But maybe there is something more to it than that.

All of these high level resignations of Wall Street’s female stars have left me wondering; are women at the top disproportionately scapegoated when times get tough? On one hand, there are fewer women in high-level positions than men, and the few that have made it to the top are high profile by the nature of their scarcity, so perhaps this is why their firings make news.

However, this begs the question of which came first, the chicken or the egg? Was the termination of these women newsworthy because they were high-profile already, or did the public role that these women played as female ambassadors and trendsetter on Wall Street make them better “scapegoats,” because they embodied the public face of the company? In other words, is it easier to target female executives because directors can assure investors that they are “cleaning house,” and the people most associated with the company during the period of economic downturn are gone?

In her new book, The Shock Doctrine, Naomi Klein persuasively argues that the U.S. government uses the public disorientation following massive collective shocks, including wars, terrorist attacks and natural disasters, to push through strikingly unpopular economic therapy. The idea is that, in times of crisis, the public is paralyzed by shock, and, with government collaboration, corporations implement forceful economic policies that would otherwise be opposed in more peaceful times.

In an extension of this theory, it could be argued that, in times of economic downturn, investors regress to stereotypes, and forget everything they have learned about the value of diversity. In tough times and behind closed doors, perhaps political correctness goes out the window, and mostly-male directors and officers want to fill the top position with someone who fits the archetype of a strong but benevolent paternal ruler who will steer the company out of crisis with a firm hand and a reassuring manner.

I hope to see more women gracing the front pages of the Wall Street Journal again soon for doing something other than getting fired. However, the chain of recent departures of Wall Street’s top women has left this young professional a little less dewy-eyed than she once was about the prospects for getting ahead as a woman in finance.