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Only the Men Survive

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When he went to the board for approval to fire her, he didn’t have to argue very forcefully. Most of them didn’t much like Cruz either. During a committee meeting in September, when a board member attempted to interrupt her, Cruz stuck her hand up and snapped, “I’m not finished yet!” But in reality, she was.

In the debate over Cruz’s firing, some say her subordinates were responsible, and some argue that Mack should have taken the fall. Some say Cruz deserved to lose her job, although there was something disturbing in the way she was so singularly blamed. “It’s grotesque to pin this all on Zoe,” says a former Morgan Stanley executive who happens to be a man. “She broke the rules in the boys’ club. She got promoted over all the boys. They want to prove she was never up to it when it all crumbles.”

Wall Street women, by and large, were not surprised. In tough financial times, female executives tend to be the first to go. “In a bull market, women are fine,” says Janet Hanson, a former Goldman Sachs executive who runs the women’s networking group 85 Broads. “When the shit hits the fan, these guys probably don’t even trust each other. Could you theorize that more women get chucked when things start going deadly? They sacrificed her.” Women got slaughtered during the dot-com bust in 2001, says Linda Bialecki. The gender breakdown of the Wall Street workforce, according to a Securities Industry Association study, went from 43 percent women in 1999, just before the peak of the tech boom, to 37 percent in 2003, after the layoffs.

More important than the number of women in the field, however, are the positions they hold. There are very few women in the highest levels of management at any of the big Wall Street firms. Goldman has three women on its management committee of 29, but only one of those positions wields any real power—the others are general counsel and a hedge-fund liaison. Similarly, the two women in upper management at Merrill Lynch work in public affairs and as general counsel. Respectable jobs, certainly, but not jobs that lead to CEO. Citigroup’s Sallie Krawcheck was recently moved from CFO to a less high-profile position. Morgan Stanley and Lehman Brothers have one woman each in upper management, JPMorgan has two, Credit Suisse has none.

There are any number of reasons why women don’t often reach the promised land of power: They lack the networks of their male counterparts; some of them leave work to raise a family; there are simply fewer women getting M.B.A.’s and going into finance in the first place. Then again, perhaps those factors would reverse if there were more women in positions of power. The real problem is that the proverbial glass ceiling is self-reinforcing. The traits that a woman must develop to duke it out on the trading floor will come back to haunt her as she ascends the ranks of management. As a current Morgan Stanley woman puts it, “He gets ‘Mack the Knife’ and that’s cool, and she gets ‘Cruz Missile’ and that’s bad?”

Inevitably, given the current cultural context, Hanson compares the attacks on Cruz’s personality to those against Hillary Clinton, who has also been characterized as harsh and humorless. “I worked with some of the greatest people ever to play the game at Goldman,” says Hanson, “and I don’t think anybody would have described them as the most fun at the party.”

In the end, Cruz simply couldn’t win. Subprime losses or not, the idea of her running Morgan Stanley was like sacrilege to her enemies. To add insult to injury, Howie Hubler and Tom Daula left with nary a press release, and Neal Shear was only demoted (eventually departing of his own accord). And Vikram Pandit, her old adversary, was made the new CEO of Citigroup twelve days after she was fired.

Cruz’s insistence that Morgan Stanley would hold up better than other banks in the “neighborhood” turned out to be more or less right. Citigroup, UBS, and Merrill Lynch have continued to post extraordinary losses, while Morgan Stanley has largely regained its footing, beating analysts’ expectations in the first quarter of 2008, which in part reflected Cruz’s performance.

Today, Cruz is recovering from the only professional life she’s ever known. She tells friends she accepts responsibility for the losses that happened on her watch, and she remains uncomfortably aligned with her former employer as they face shareholder lawsuits. But she still feels the way the company laid the blame at her feet—the way Mack betrayed her—was unjust.

She’s starting to weigh her options for a return to Wall Street—perhaps at a private-equity firm or a hedge fund. Though according to her friends, retirement seems to suit her. She’s grown out her hair and started wearing makeup. “She looks beautiful,” says a friend. One can’t help but notice it’s an observation that wouldn’t be made about a male executive in exile.


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