The Principle: A Short History of Finance’s Glass Ceiling

The Principle: A Short History of Finance’s Glass Ceiling

The debate over who should serve as the next chairperson of the Federal Reserve (Fed) is indicative of the glass ceiling that persists in the world of finance. Many consider President Obama’s former economic adviser, Larry Summers, as the front runner to serve as the next chairperson of the Fed once current chairman Ben Bernanke steps down next year. Yet, several Democrats, economists, and journalists have voiced their support for the current Vice Chairwoman of the Fed’s Board of Governors, Janet Yellen.

Janet Yellen. (Flickr)


The discussion intensified as journalists began to inquire about sexism in finance and male dominance among the top economic brass. Ezra Klein summarized the sexism embedded in the expressed expectations of a Fed chair:

“She [Yellen] lacks ‘toughness.’ She’s short on ‘gravitas.’ Too ‘soft-spoken’ or ‘passive.’ Some mused that she is not aggressively brilliant or intellectually probing as other candidates – though they hasten to say she’s clearly very knowledgeable about monetary policy. Others have wondered whether she could handle the inevitable fights with Congress.”[1]

Essentially, critics suggested that Yellen was too weak and not intelligent enough for the rigors of economic leadership.

This is a familiar argument.

The spirit of Klein’s summation of the “subtle, sexist whispering campaign” has a long history. It reflects a fundamental principle about leadership that has governed finance since the rise of modern capitalism: that white men are best suited to lead Western financial institutions.

The assumption helps explain the persistence of finance’s glass ceiling. No woman has ever worked as a CEO of Goldman Sachs or any other prominent Wall Street firm. Only seventeen women lead the world’s 177 central banks. No woman has served as the Fed’s chair since the Federal Reserve Act established the position in 1913. Only three women (Laura D’Andrea Tyson, Janet Yellen, and Christina Romer) have chaired the President’s Council of Economic Advisers since it was established in 1946. No woman has led the World Bank. Christine Lagarde became the first female managing director of the International Monetary Fund in 2011.

Christine Lagarde. (Wikimedia)

This theory of economic leadership is built upon a sexist contradiction—no one ever questions the essence of male management, even as male-dominated financial organizations steered the U.S. economy into crises in the late nineteenth century, the 1920s and 30s, the 1970s, and in 2007-2008. No one ever questioned the role that male dominance played in inflicting legalized and institutionalized financial violence on working men and women and developing nations.[2] Few point to masculinism when trying to explain how traders, as they gambled with workers’ assets, provoked the financial crisis in 2007. This principle has produced a complicated history of women’s participation in finance. Women have worked as investors, traders, and speculators at particular moments, but most individual women continue to bump into the glass ceiling.

Feminist economists like Nancy Folbre and Libby Assassi locate the gendering of western economics in ideas about gender and commodity exchange that took hold in the eighteenth and nineteenth centuries. The British notion of coverture—where women relinquished their rights upon marriage—initially excluded women from owning private property in early America. Several U.S. states did pass laws allowing some women to own property in the nineteenth century. However, the advent of the false “public” and “private” dichotomy justified women’s exclusion from the male “public” domain of politics and market exchange. Men could adopt multiple characteristics needed to navigate the economy successfully—they could be rational, aggressive, and self-interested. And as corporate capitalism and financial markets matured, men became “bullish” risk takers while women were seen as risk averse.

Exceptions to the rule make for a complicated history of women in finance. According to historians Nancy Marie Robertson, Susan M. Yohn, and Robert E. Wright, some women were able to invest in equities, private companies, and property. In 1870, sisters Victoria Woodhull and Tennessee Celeste Claflin established a brokerage house which netted them $700,000.

Victoria Woodhull . (Flickr)

Yet, Robertson, Yohn, and Wright point to the rise of the cult of domesticity in the nineteenth century, the rise of male-dominated corporations, and the further professionalization of banking to explain the marginalization of women. Women could still work in financial institutions, but they usually wielded little decision-making power. By the twentieth century, women leading financial institutions was out of the question.[3]

Masculinist understandings of finance and gender exclusion persisted well into the twentieth century. In 1958, Arturo and Janeann Gonzalez called Wall Street, “the nation’s last great stronghold of masculine supremacy.” Their New York Times article reported some thoughts about women’s prospects on Wall Street:

“Charm and sex appeal don’t mix with money.”

“The exchange floor is too rough and physical an arena for a lady.”

“Women can’t think or act decisively enough to keep up with the trading pace.”[4]

Ironically, women could own stock, but financier Muriel Siebert only became the first woman to own a seat at the New York Stock Exchange in 1967.

Tennessee C. Claflin. (Wikimedia)

Civil rights legislation cracked the doors of opportunity further, allowing the first generation of women to play meaningful roles in Wall Street. Still, as Melissa S. Fisher reveals in her book, Wall Street Women, women encountered finance’s sexism. For Fisher, Helen O’Bannon is a prime example. In 1973, O’Bannon sued Merril Lynch for sex discrimination. O’Bannon pointed to a question in Merrill Lynch’s entrance exam as evidence. It asked:  “When you meet a woman, what interests you most about her?” The answer:  “Her beauty.” Those eleven words objectified women and denied their intelligence in one fell swoop. The heterosexist assumptions embedded in the exam points to the masculinism that O’Bannon and other women would face when entering the finance world in the 1970s.[5]

The “good ole boy” networks still persist in finance, and Larry Summers may advance because of it. As the New York Times observed recently, Summers “is a member of a close-knit group of men, protégés of the former Treasury Secretary Robert E. Rubin, who have dominated economic policy-making in both the Clinton and Obama administrations. Those men, including the former Treasury Secretary Timothy F. Geithner and Gene B. Sperling…are said to be quietly pressing Mr. Obama to nominate Mr. Summers.”[6]

Larry Summers. (Wikimedia)

Many economists understandably express their concerns about the gender debate. In a recent CNN Money survey of female economists, thirty-eight out of forty-five respondents said that Yellen should get the job. Several respondents maintained that gender is an issue, but that it should not drive Obama’s nomination. These concerns point to the principle’s legacy and the dilemma it poses for any non-white and/or non-male striving professional: You may want justice, but you want your qualifications to determine your fate. There is some progress, but depending upon the position’s prestige, closed “good ole boy” networks and history could still work against you. President Obama should opt for the exception to the rule, but dismantling it is preferred.

[1] Ezra Klein, “The subtle, sexist whispering campaign against Janet Yellen,” Washington Post, 19 July 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/19/the-subtle-sexist-whispering-campaign-against-janet-yellen/?wprss=rss_ezra-klein

[2] The 1978 Volcker shock comes to mind. Federal Reserve chairman Paul Volcker threw the U.S. into a recession during the early 1980s by raising interest rates in order to lower inflation. It caused unemployment to spike above 10%.

[3] Nancy Marie Robertson and Susan M. Yohn, “Women and Money:  the United States,” in Women and their Money, 1700-1950, edited by Anne Laurence, Josephine Maltby and Janette Rutterford (New York:  Routledge, 2009):  218-225; Arturo Gonzalez and Jane Gonzalez, “Where No Woman Reaches the Summit,”  New York Times, 17 August 1958.

[4] “Where No Woman Reaches the Summit”

[5] Melissa S. Fisher, Wall Street Women (Durham:  Duke University Press, 2012); Fisher, “How Women Rose and Took the Fall on Wall Street,” Bloomberg News, 13 July 2013,, http://www.bloomberg.com/news/2013-07-10/how-women-rose-and-took-the-fall-on-wall-street.html

[6] “in Tug of War Over New Fed Leader, Some Gender Undertones,” New York Times, 25 July 2013,  http://www.nytimes.com/2013/07/26/business/in-tug-of-war-over-new-fed-leader-some-gender-undertones.html?pagewanted=1&hp&_r=0

Featured image caption: Wall Street – New York Stock Exchange. (Wikimedia)

Austin C. McCoy is a Phd Candidate in History at the University of Michigan. He is writing a dissertation on progressives' responses to plant closings and urban fiscal crises in the Midwest during the 1970s and 1980s.