There's a question that has been bobbing around like a party balloon since it was first aired at the 2009 World Economic Forum in Davos: would the global financial crisis have occurred if, instead of Lehman Brothers, there had been Lehman Sisters. Google that punchy phrase and you will find not only yards of chatter but also a wealth of academic literature exploring the link between finance's macho culture and the kind of behaviour that produces trading errors and broader crises of escalating proportions. Did the whips for the UK's main political parties not get the meme?
Yesterday was the first hearing of the UK Parliamentary Commission on Banking Standards. The commission has a broad remit to consider and report on the professional standards and culture of the UK banking sector, considering the implications for government policy and regulation. The commission was established following the Libor scandal and the JPMorgan "London Whale" trading loss, not to mention the five year old financial crisis.
At the core of banking standards are questions of organizational culture, approaches to and inclusion in decision-making, ethical insight and assessment of risk. Surely no one thought the commission's mandate could be fulfilled without a good look at the issue of gender.
People (men and women) who identify with masculine attributes have a greater tendency to take risks. Such identification and risk-taking is influenced by the gender-mix of the group. If you want to get chemical about it, the female hormone oxytocin boosts empathy, trust and collaboration, which feed through into observed socially-oriented behaviours.
Gender traits aside, diversity avoids the kind of groupthink attributed to Northern Rock's management team. The UK coalition government has already documented the contribution that boardroom diversity can make to company performance.
Might not gender then be a critical issue that needs to be addressed when investigating the financial sector, an industry with a well-documented history of gender-based discrimination, where diversity policies are subtly but systematically undermined such that women seldom find a place at the organizational level where culture is set?
In a circular way, that culture impedes women from making it to the top. Ilene H. Lang is president and chief executive of Catalyst, a New York-based global research and consulting nonprofit focused on women's career advancement. In an interview for the New York Times, she puts the problem thus:
"The Wall Street culture is characterized by what you might call really macho kinds of behavior...what's looked up to on Wall Street are people who swagger, people who will do the deal at any cost, people who will work day and night, hour and hour, for lots and lots of money and they don't care about anything else...That's a very masculine, macho culture, again a stereotype, and, in general, it's very hard for women or men to picture women being that way because that conflicts with the stereotypic norms of what women should be like."
If anyone thinks this is a problem limited to Wall Street, take a good look at the 2009 report of an inquiry initiated by the UK's Equality and Human Rights Commission. The UK financial sector's macho culture is well-documented anecdotally elsewhere.
The Parliamentary Commission on Banking Standards must specifically address the linkages between gender and bank culture. Will it do so? Is it equipped to do so, or does it symptomize the very disease it has been mandated to diagnose?
The Commission is a cross-party affair, with commissioners being selected by the party whips. In their wisdom they have selected just one female voice for inclusion in a panel of ten commissioners. Surely - at a minimum - commissions such as this should reflect the gender composition of Parliament as a whole, where women make up just one in five of the members of both the House of Commons and the House of Lords.
One candidate might have been Andrea Leadsom, a Conservative MP who used to be an executive at Barclays and demonstrated great ability in her cross-examination of the former Barclays boss Bob Diamond at the Libor hearings.
And why stop at this minimum? Diversity is good for policy-making in general. But it is surely imperative for the work of a commission focused on the ethics and risk-taking culture of this most masculine of sectors.
The commission has been hobbled from the get-go. Let's hope they take every possible opportunity to inform their hearings and report with gender perspectives, and take the insights gleaned through to relevant proposals on root-and-branch reforms of bank governance.