Wall Street spends scads of money modeling virtually every conceivable risk. So what accounts for its mortgage debacle?
Wall Street firms like Merrill Lynch, Citigroup (nyse: C – news – people ) and Bear Stearns (nyse: BSC – news – people ) spend tens of millions of dollars a year managing risk. They field departments full of smart analysts to assess market, credit, liquidity and operational risk. The process is marked by a formal governance structure and risk-tolerance limits.
That’s what the banks tell investors, anyway. When it came to their exposure to the subprime mortgage market, none of this seemed to matter.
“Executives believe what they want to believe,” says Frederick Cannon, a bank analyst at Keefe, Bruyette & Woods. “They know [booms] are going to end, but they don’t know when. In the meantime, it’s a lot of fun to make money.”
i would like to submit another possibility why … it’s run almost exclusively by greedy alpha males.
WOMEN’S aversion to intersecting with Wall Street appears to be mounting: Generation Y, also dubbed the “Millennials,” say they value balance more than financial security, suggesting fewer will gravitate to the cutthroat environs of the Street. Bank executives say fewer female M.B.A.’s are choosing careers on the Street, and the banks also say they have had limited success stanching the flow of women who leave midcareer. Of course, not all women leave to raise a family. Some elect to care for parents who are aging or ill; others seek alternative careers with more manageable hours.