Women and finance

[nancylebov]

In Michael Lewis's major article about the financial crisis, he says:

The surface rippled, but down below, in the depths, the bonus pool remained undisturbed. Wall Street firms would soon be frowning upon profanity, firing traders for so much as glancing at a stripper, and forcing male employees to treat women almost as equals. Lehman Brothers circa 2008 more closely resembled a normal corporation with solid American values than did any Wall Street firm circa 1985.

The changes were camouflage. They helped distract outsiders from the truly profane event: the growing misalignment of interests between the people who trafficked in financial risk and the wider culture.

He isn't blaming the crisis on feminism except to whatever limited extent making those changes distracted people from paying attention to what was being done with money.

However, in his more recent piece about the crisis in Iceland, where it's been unusually disastrous, he describes an unusually aggressive male culture:

The best way to see any city is to walk it, but everywhere I walk Icelandic men plow into me without so much as a by-your-leave. Just for fun I march up and down the main shopping drag, playing chicken, to see if any Icelandic male would rather divert his stride than bang shoulders. Nope. On party nights—Thursday, Friday, and Saturday—when half the country appears to take it as a professional obligation to drink themselves into oblivion and wander the streets until what should be sunrise, the problem is especially acute. The bars stay open until five a.m., and the frantic energy with which the people hit them seems more like work than work. Within minutes of entering a nightclub called Boston I get walloped, first by a bearded troll who, I’m told, ran an Icelandic hedge fund. Just as I’m recovering I get plowed over by a drunken senior staffer at the Central Bank. Perhaps because he is drunk, or perhaps because we had actually met a few hours earlier, he stops to tell me, “Vee try to tell them dat our problem was not a solfency problem but a likvitity problem, but they did not agree,” then stumbles off. It’s exactly what Lehman Brothers and Citigroup said: If only you’d give us the money to tide us over, we’ll survive this little hiccup.

******

One of the distinctive traits about Iceland’s disaster, and Wall Street’s, is how little women had to do with it. Women worked in the banks, but not in the risktaking jobs. As far as I can tell, during Iceland’s boom, there was just one woman in a senior position inside an Icelandic bank. Her name is Kristin Petursdottir, and by 2005 she had risen to become deputy C.E.O. for Kaupthing in London. “The financial culture is very male-dominated,” she says. “The culture is quite extreme. It is a pool of sharks. Women just despise the culture.” Petursdottir still enjoyed finance. She just didn’t like the way Icelandic men did it, and so, in 2006, she quit her job. “People said I was crazy,” she says, but she wanted to create a financial-services business run entirely by women. To bring, as she puts it, “more feminine values to the world of finance.”

Today her firm is, among other things, one of the very few profitable financial businesses left in Iceland. After the stock exchange collapsed, the money flooded in. A few days before we met, for instance, she heard banging on the front door early one morning and opened it to discover a little old man. “I’m so fed up with this whole system,” he said. “I just want some women to take care of my money.”

*****

Back in 2001, as the Internet boom turned into a bust, M.I.T.’s Quarterly Journal of Economics published an intriguing paper called “Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment.” The authors, Brad Barber and Terrance Odean, gained access to the trading activity in over 35,000 households, and used it to compare the habits of men and women. What they found, in a nutshell, is that men not only trade more often than women but do so from a false faith in their own financial judgment. Single men traded less sensibly than married men, and married men traded less sensibly than single women: the less the female presence, the less rational the approach to trading in the markets.

This suggests that if it weren't for affirmative action and sensitivity training and such, the US financial crisis would have been even worse.

Link for the Iceland article thanks to patrissimo.

Comments

[nancylebov.livejournal.com]

This reminds me of something I saw in an investment advice book long ago: Before you make an investment, ask yourself "Would I do this if I couldn't tell anyone but my accountant?".

[rimrunner.livejournal.com]

Wow. That describes an incredibly foreign way of thinking to me—because it's never occurred to me to tell anyone BUT my accountant. (Even conversations with my husband on the subject go like this: Him: "Are we solvent?" Me: "Yes." Him: "Okay." End of discussion.) I think finance is incredibly interesting, which is one of the reasons I'm reading your LJ, but don't see how my personal investments could be of interest to anyone but me. Who cares?

I should ask my financial services firm how many female VPs they have.

[fidelioscabinet.livejournal.com]

There's a school of thought that keeps insisting that what you do has to be done for the sake of impressing others--and managing your financial affairs is included. Remember "Keeping up with the Joneses"? I suspect that if you are someone who can't imagine why you should bother to do that, the idea of investing to impress is also going to sit very strangely. But there are all too many people for whom the Joneses ot only must be kept up with, but outdone whenever possible.

[brewsternorth.livejournal.com]

Which observation, I suppose, goes some way to explaining why CEOs and hedge-fund managers take away, or have taken away in the past, such extraordinary bonuses.

[fidelioscabinet.livejournal.com]

An interesting and valuable point. Because are you investing for your financial welfare, or for the sake of your ego? It's like the issue of the house you live in or the car you drive, or the clothes you wear--are any of these selected simply to satisfy you, or for the sake of the impression they will make on outsiders? (Yes, that is an impersonal you, there.)

[kgbooklog.livejournal.com]

"Would I do this if I couldn't tell anyone but my accountant?"

Lawrence Watt-Evans wrote a multi-part essay about class in America, with sections about attitudes towards money (http://www.watt-evans.com/blog/?p=70) and possessions (http://www.watt-evans.com/blog/?p=73).