Wednesday, May 14, 2014

The New Sheriffs of Wall Street: Where Are They Now?

The New Sherriffs of Wall Street
In May, 2010, Time Magazine identified the “New Sheriffs of Wall Street” as three women whose jobs were to then clean up the Wall Street mess that was referred to as the “Great Recession”.  Included were Sheila Bair, the chair of the Federal Deposit Insurance Corporation (FDIC) and one of the first federal regulators to publicly sound the alarm about the collapse a few years earlier; Securities and Exchange Commission (SEC) chair Mary Schapiro, the first woman to hold that post and the deciding vote to initiate the agency's lawsuit against Goldman Sachs; and Elizabeth Warren, chair of the panel monitoring the Troubled Asset Relief Program (TARP) bank bailout and the chief advocate for new consumer-finance regulations that banks and their allies have fought furiously to oppose.   These women may not have run Wall Street, but in this new era, they were getting Wall Street to clean up its act.

To quote the Time article:

“A few weeks back, at an event to celebrate the role of women in finance, Treasury Secretary Timothy Geithner tried to get things started with a joke. He said he had recently come across a headline that asked, "What If Women Ran Wall Street?"

“Now that's an excellent question, but it's kind of a low bar," Geithner continued, deadpan amid rising laughter. "How, you might ask, could women not have done better?"

It is rarely noted that the financial wreckage littering our world is the creation, almost exclusively, of men, not women. And no wonder: to this day, each of the large banks, from Citigroup to Goldman Sachs, employs fewer than a handful of women in senior positions, and only 3% of Fortune 500* companies have a woman as CEO. Embarrassing tales of a testosterone-filled trading culture tumbled out of the what-went-wrong probes as the Great Recession took hold“.

* Update:  According to Catalyst.Org, January, 2014, women currently hold 4.6 percent of Fortune 500 CEO positions and 4.6 percent of Fortune 1000 CEO positions.

Soon you will be able to visit one of the former “New Sheriffs of Wall Street”, Shelia Bair, and find out where she is now.  At another time, we will catch up with Mary Schapiro and Elizabeth Warren.
First serving under President Bush and later President Obama, Shelia Bair was the Chairman of the Federal Deposit Insurance Corporation during one of the nation’s most turbulent economic eras in history, from 2006-2011.  After the 2008 collapse and upheaval of U.S. and global markets as well as venerable financial institutions, Chairman Bair worked to bolster public confidence and financial system stability that resulted in no runs on bank deposits. The FDIC did not turn to taxpayer borrowing to manage its losses and liquidity needs, instead funding them through its traditional means of assessing banks for the cost of insuring their deposits. The FDIC’s resolution practice of selling failing banks to healthier institutions, while providing credit support of future losses from failed banks’ troubled loans, saved the FDIC’s Deposit Insurance Fund, tens of billions of dollars over losses it would have incurred if the FDIC had liquidated those banks.
Her efforts established her as an ardent advocate and innovator of policies to end the doctrine of too-big-to-fail and taxpayer bailouts.

A working mother and lawyer hailing from Kansas, Bair’s illustrious Curriculum Vitae reads like a Who’s Who in public life:  among her positions were counsel to Senator Bob Dole in his Washington office; Assistant Secretary of the Treasury for Financial Markets; and executive level positions at the Government Relations of the New York Stock Exchange; The Commodity Futures Trading Commission and in academia - the Dean’s Professor of Financial Regulatory Policy at UM Amherst.

Shelia Bair, former Chairperson of the U.S. FDIC.
with Ben Bernanke & Hank Paulson
When Bair’s term at the FDIC was over she left in 2011, first serving as an adviser to the nonprofit Pew Charitable Trusts,  then leading a new private sector group called the Systemic Risk Council whose mission will be to encourage reform.   Here in the U.S., the Dodd-Frank law was designed, in part, to eliminate systemic risk - that is, the idea that the failure of one institution could be big enough to bring down an entire economy. Implementing financial reform has taken longer than expected, though, and that has many watchdogs increasingly on edge.
Traditionally issues are raised as one moves from regulator to regulated.  
In order to avoid conflicts, Ms. Bair has decided not to work for a financial services firm in the United States.

Earlier this year, Bair joined the board of Spanish bank Santander, one of the largest banks in Europe with vast operations in the U.S., having amassed a number of banks in the wake of the financial crisis.

“I hope that my service on the Santander board will provide yet another avenue for continuing my commitment to reforming the global financial system and contributing to a safer, more responsible, and customer oriented banking system,” Bair said in a statement.

At Santander, Bair, as an independent director, will help advise on the running of a bank whose asset base is as big as the Spanish economy and with the biggest market value of any lender in the euro zone. 

Tim Geithner isn't alone in asking the question, What if women, not men, were the real powers on Wall Street? With the successful tenures of Bair, Schapiro and Warren, we are finally getting an answer.  They were fabulous!

For more information about Wall Street and New York's Financial District, join a Wall Street Walks guided walking tour!