Why isn’t there an insanely profitable all-female Wall Street bank?

“The Cost of Devaluing Women” (nytimes) says that women are systematically excluded from jobs on Wall Street and that this leads to underperformance:

Homogeneity has led Wall Street firms to travel in packs, going after the same opportunities at the same time: junk bonds in the 1980s, tech stocks in the late 1990s and subprime lending in the run-up to the crash 10 years ago. … one can draw a line from the gender discrimination on Wall Street through to the lack of women — and lack of diversity of thought — in the industry to increased risk and to the financial crisis.

If there are women out there with amazing skills who have been pushed out by the big banks, why isn’t there an all-female bank that is able to deliver amazing performance at a low cost? Or maybe a mixed-gender bank that doesn’t practice gender discrimination and is therefore super profitable to the point that it can put the “brotrader” banks out of business?

Wall Street is all about greed, right? Why isn’t there someone greedy enough to want to become the richest person on the planet by starting a bank staffed entirely by women whose contributions to the established banks weren’t recognized?

10 Comments »

  1. Neal

    December 4, 2017 @ 12:06 pm

    1

    “Why isn’t there someone greedy enough to want to become the richest person on the planet by starting a bank staffed entirely by women whose contributions to the established banks weren’t recognized?”

    In this industry one becomes rich by exploiting network effects, not trying to work around them.

  2. TimB

    December 4, 2017 @ 12:53 pm

    2

    Or why didn’t Marissa Mayer staff all senior positions at Yahoo with talented women tech execs and become a credible challenge to Google?

    You’re messing with “the narrative”, Phil. It’s dangerous.

  3. Nowhere Man

    December 4, 2017 @ 5:55 pm

    3

    why isn’t there an all-female bank that is able to deliver amazing performance at a low cost?

    Or an all-female software or consulting company?

  4. superMike

    December 4, 2017 @ 10:58 pm

    4

    @nowhere Dame Steve Shirley did exactly that.
    Is is possible that Wall Street banks are run on an influence/patronage/connections model? It is possible that you can’t just start one out of the blue and have it work?

  5. Steve

    December 5, 2017 @ 5:58 am

    5

    It’s quite the novel macroeconomic theory that “diversity” can abolish the business cycle, especially the diversity provided by upper-class white women.

  6. the other Donald

    December 5, 2017 @ 6:21 pm

    6

    “In this industry one becomes rich by exploiting network effects, not trying to work around them.”

    Neal for the win!

  7. philg

    December 5, 2017 @ 10:55 pm

    7

    Neal, Donald: So https://en.wikipedia.org/wiki/John_Paulson could have made some real money if he had worked a network rather than simply trading? And https://en.wikipedia.org/wiki/Renaissance_Technologies might have been a successful enterprise as well if those guys had been Wall Street insiders rather than college professors?

  8. Norbert

    December 6, 2017 @ 1:31 pm

    8

    I think the same thing is true about claims that the fashion industry is biased against fat women, leaving large amounts of money on the table in order to avoid selling fashionable clothing to larger women. If it were so easy you’d see somebody somewhere stepping in to scoop up the money.

    The real problems are that women are fat in so many different ways that each size is a niche market, and the mythical “fashionable fashion for fat women” doesn’t really exist: part of what makes clothes look good is the body they are on.

  9. Neal

    December 7, 2017 @ 10:46 am

    9

    philg: John Paulson wasn’t a part of a network? Academia isn’t a network? Please.

    Anyway, this argument is a variation on the “Discrimination has economic costs. If people are economically rational actors and, why would they discriminate?” argument. There is plenty of direct evidence that people take economically irrational actions including discrimination. By treating an Econ 101 simplifying assumption as an Econ 101 axiom you are begging the question “If people are economically rational actors”.

  10. Sam

    December 10, 2017 @ 6:18 pm

    10

    Neal –

    So the reason there hasn’t been a successful all-woman company is that women aren’t able to network? I thought women were supposed to be better at networking than men.

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