Wall Street is notorious for its lack of female power brokers. Catalyst reports that women make up only 15 percent of executive or senior-level officers in investment banking and securities companies.
The fall of one of these women results in public scrutiny. Ina Drew of JPMorgan Chase is the latest casualty. Until May 14, Ms. Drew was a member of the bank’s operating committee and headed its Chief Investment Office, a unit blamed for losses in excess of $2 billion.
Traders in the London office of her unit made huge investments in extremely complicated financial instruments. In early April, the market turned against the investments and losses swelled. However, Ms. Drew argued strenuously at the time that the market would swing again and the investment would be salvaged. Despite her assurances, conditions deteriorated and Ms. Drew (age 55) announced her retirement.
Ms. Drew’s prior performance had been stellar. The Chief Investment Office contributed more than $4 billion of net income over the prior three years, nearly 10% of the company’s profit during that time. Because of her success, Jamie Dimon, JP Morgan’s CEO, rarely grilled her at operating committee meetings as rigorously as her counterparts. Her favorable treatment was resented by other executives.
There is little argument about these facts. However, many questions remain. Why is Ms. Drew the only JP Morgan employee who has left to date as a result of these losses? What did Mr. Dimon know? What is the significance of Ms. Drew’s “retirement” for other women executives?
That last question is the most pertinent one for Fem2pt0 readers, but it can’t be answered without considering the others.
Who should be forced out of JPMorgan?
Bruno Iksil made the disastrous investment from the European Desk of the Chief Investment Office. Achilles Macris headed that desk. In a lethal misstep, last year Mr. Macris rescinded a risk control cap that required traders to sell their positions when losses exceeded $20 million. While many news outlets report that these men are “expected to leave” JPMorgan, neither has.
Another candidate for termination is Jamie Dimon. Although all of the circumstances behind the disastrous trading aren’t known, Ms. Drew reported directly to Mr. Dimon. Mr. Dimon encouraged her unit to make high risk bets. He traveled to London and, in fact, met with the bank’s traders there. He is quoted by a Wall Street Journal reporter as having told her, ““I screwed up.”
Was Ms. Drew’s gender a factor?
News articles note that she offered to resign “multiple” times in the weeks leading up to the shareholder meeting. The Wall Street Journal reports that, “Some executives, frustrated that Ms. Drew had gotten what they viewed as special treatment, pressed Mr. Dimon to fire her. Mr. Dimon delayed the inevitable, they say, responding: “What if this were your sister after 30 years of great performance and you said: ‘You’re out of here’?”
In Forbes, Bryce Covert, a female writer, draws parallels between Ms. Drew’s fall and those of two other women executives in the financial industry. The writer suggests these women were scapegoated by male bosses and that, perhaps, their prior success had been based in part on a push for diversity. She also implies that, unlike male executives, Ms. Drew lacked a powerful network to protect her.
Ina Drew should not be considered a woman who was advanced because of her gender. She has been a highly regarded bank employee for 30 years. In 1987, she became a managing director and in 1993, Crain’s New York Business named her one of 40 executives under 40 to watch. She has been in charge of JPMorgan’s Chief Investment Office since 2005. Although diversity advancements may prove to be detrimental in the long run, Ms. Drew is not the “poster child” for that proposition.
It is difficult to make the case that Ms. Drew was scapegoated because the actions of her 41 employees in the Chief Investment Office in fact caused a loss that may reach $5 billion dollars. Supervising a group that small, she must have known what was happening.
As a former corporate executive, I believe her departure from the bank was appropriate. She was responsible for what happened and rightfully took the fall. She is a scapegoat only if her departure spared Mr. Dimon from a deserved dismissal. Until the extent of his prior knowledge of the trades by the European Desk and its removal of the risk control cap are conclusively determined, his culpability is an open question.
Ms. Covert’s suggestion that a lack of a supportive network doomed Ms. Drew may be closer to the mark. Other executives jealous of her favorable treatment by Mr. Dimon urged her dismissal or as one source put it, “The long knives were out.” However, the enmity seems not to be a result of her gender. And, the sad truth of corporate life is that executives are often quick to attack their peers.
However, gender may have played a role in the way her departure came about. New York Magazine quotes Katherine Phillips, a behavioral psychologist at Columbia Business School as saying, “When things go wrong, women tend to make internal attributions. A man will say, well, it was these outside factors that caused the problem. A woman will say, these are things that I did that contributed to the problem, which in this case would probably more likely lead her to say ‘I’ll take the fall for it.’ She might be right to blame herself. But in that situation, it could also be that there are men who are not taking the blame.”
The departure of Ina Drew from JP Morgan is unfortunate for her and the bank’s junior female employees. She actively mentored women within the firm and was their “passionate advocate.”
Forbes identifies nine powerful women (two at JP Morgan) who are left on Wall Street. Let’s hope these numbers are on the uptick.
Photo Credit: Bloomberg BusinessWeek