Wall Street has a problem
Joseph Jett was once a Wall Street star. In 1993, two years after joining the now defunct Kidder Peabody, he was paid a bonus of $9.3 million (about $16.5 million today). The bank even named him Man of the Year. But three months later, when his bond trades were generating quarterly profits of $350 million, alarm bells started ringing. An investigation was launched. Jett was a fraud: he had found a glitch in the bank’s computer system, allowing him to record fictitious profits, which he was happily exploiting. He was fired.
The SEC was alerted. The media found out and photographers flocked to Jett’s apartment block to doorstep him. But Jett managed to elude most lenses. In fact, he walked right past them. He wasn’t even in disguise. No. Jett was black. And nobody had even imagined that a star trader on Wall Street could be black.
In fairness to the snappers, just five per cent of Wall Street employees at that time were black. So, what is the percentage today, almost 30 years later, I hear you ask? That would be roughly six per cent in a country where African Americans represent 12 per cent of the workforce. Admittedly, the percentage may be higher within individual banks, but, in aggregate, progress over the past 30 years could just amount to a rounding error.
Why am I mentioning this? Well, I’ve always loved the story of Joe Jett’s would-be-walk of shame, and find it worth repeating, but also because the bosses of Wall Street banks, like their counterparts in other industries, have publicly condemned racism following the events in Minneapolis, when George Floyd, an unarmed black man, was unlawfully killed by a white police officer. Such a move is rare for a sector that often avoids taking stances on social issues, so it certainly means something is changing.
For example, Jamie Dimon, chief executive of JP Morgan Chase, and the bank’s newly appointed – and first – diversity officer Brian Lamb wrote to each of its 250,000 employees expressing their commitment ‘to fighting against racism and discrimination wherever and however it exists’.
Strong words, indeed. And the appointment of Lamb in April was accompanied by a raft of initiatives to promote diversity and tackle racism, including mandatory diversity training for all employees – not just when they are appointed, but at random points throughout their careers and also if they are promoted to a managerial position.
The bank has also pledged to make greater efforts to ensure that it works with suppliers who diverse workforces, expand the team that recruits diverse talent and make its products available to all, after a former NFL basketball player, who is black, claimed he was denied access to its private client services.
It has also promised to listen more carefully to employee complaints, after a class action was filed by a former colleague alleging that black personal bankers were assigned to lower performing or lower income branches, thus restricting their earnings potential.
I’m not arguing that these initiatives aren’t worthy – although the last two appear to be prompted by external factors and negative headlines – nor am I having a dig at JP Morgan Chase, particularly. I’m simply pointing out that minimal progress has been made on Wall Street in 30 years. And if the dial isn’t moving, then it suggests that a more radical approach is required.
Many firms have now implemented targets for recruiting black employees at entry level and some, like Goldman Sachs, are holding business heads accountable for improving the diversity of their teams. College bursaries and internships are also being launched.
But perhaps the focus should be less on recruitment and more on retention: the number of black senior executives on Wall Street remains pitiful, often representing as little as two or three per cent of the total. Indeed, in the main, black representation at boardroom level is hired in (for non-executive roles) rather than recruited from within the organisation,
Surely this indicates an environment in which black people feel unable to thrive and prosper? Indeed, in recent years, many Wall Street banks have reported that their black employees have declined in numbers rather than risen. Isn’t that what needs to be tackled? Not recruiting more people to struggle to progress, and wrongly feel like failures. It’s about changing the culture – and that has to come from the top.