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Taming the pit bulls of Wall Street

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WASHINGTON -- "The pitchforks were out in the street with the white heat of anger," the ex-Congressman was saying, recalling the free-fall on Wall Street in the fall of five years ago. "I thought we might lose control of the government."

"As a former banker, I was disgusted by some of the things I saw," the former finance pharaoh, sitting alongside, decried.

This was Hank Paulson, George W. Bush's secretary of the treasury, recalling the panic of the autumn of 2008 at an event convened to reflect on the disaster after five years of what U.S. President Barack Obama calls "recovery." Next to him was the retired but not-yet-doddering Barney Frank of Massachusetts, co-author of the Dodd-Frank law that is supposed to reign in the robber barons before they can crack open our nest eggs again and ravage our RRSPs.

"We will know if these things work when we get another crisis," Paulson noted reassuringly.

The two men at the podium agreed that the much-ridiculed Bush had acted admirably throughout the near-total collapse of the free-world economic system.

"He was a great president during this crisis," vouched Republican Paulson. (It was Paulson who had said in May 2008 that "I do believe that the worst is likely to be behind us.")

"He deserves a lot of credit for defying his own ideologies," said Democrat Frank.

In particular, they mentioned the Troubled Assets Relief Program that salved the weeping trillionaires with troughs of public cash.

"When I left office, torture scored higher in the polls than TARP," Paulson sighed.

(The ex-CEO of Goldman Sachs had sold his shares for $600 million to take over Treasury for Bush. Seeking safety at one point in the maelstrom, I bought a small cache of Goldman shares at $170. Promptly they went down to 80 bucks.)

"A lot of stuff that was bad wasn't illegal," Barney Frank shrugged.

"The men who were running the banks weren't trying to blow their entities up," Paulson alibied. "They were dealing with a 100-year storm."

Then he corrected himself and changed "the men" to "the people."

Then he changed "the people" to "the men and women."

But blaming it on the girls was nothing new.

"The evil is not in Wall-street (sic). It is not in banks and brokers," a clergyman named John Bayley once wrote. "A great part of this tremendous evil is due to our women."

"What is the use of wasting words on our system of business -- on excessive credit -- on fictitious negotiations," the pious author went on, "so long as vain and silly wives are urging on their vainer and sillier husbands to this all-devouring ruin?"

This was in 1857, in a book titled Marriage as it is and as it should be.

A few days after the powwow with Frank and Paulson, striving to set the sexual story straight, I went to a conclave of glass-ceiling-smashers titled Women in the Boardroom to ask whether the Crash of 2008 might not have happened at all had Lehman Brothers been Lehman Sisters.

An investment banker and strategic adviser named Karen Edwards recalled sitting in meetings of venture capitalists that were hijacked by what she called "a few alpha dogs."

But when she helped to found a group called WomenAngels, "we would gather 85 women once a month to listen to pitches and almost everyone in the room would participate in the discussion and we ended up making money."

With the women, she said, "there was a less social and more studied approach. They were extremely serious about doing more due diligence. I think there is a definite difference in risk profile between men and women. With those alpha dogs, there is a culture that gets reinforced every day."

The pit bulls, alas, seemed still to be ruling the trading pits, five years after they got their tails chewed off.

"When we were in college, my generation really didn't think that, 30 or 40 years later, there would be about 16 per cent women on corporate boards in this country," Edwards said.

"So many or so few?" I asked.

"So few," Edwards sighed.

What was the key to gaining the trust and respect of the alpha dogs, someone asked a pioneer named Kay Koplovitz, the founder of the USA television network and a board member at Nabisco and Oracle, among other fledgling firms.

"I try not to be obnoxiously challenging," Koplovitz replied.

It was at about this point of the season it became clear Obama would nominate a Brooklynite named Janet Yellen to steer the Federal Reserve either away from, or into, the next recession. If confirmed by the Senate, she will be the first femme to head the Fed.

Hearing this, the Dow Jones Industrial Average went up eleven zillion points. The bet was that Yellen will be an honest broker of prosperity and not, as the Rev. Bayley wrote a century and a half ago, "a whining, sickly sentimentalist, loaded with trinkets and gewgaws; but a suitable companion for a good man."

Allen Abel is a Brooklyn-born Canadian journalist based in Washington, D.C.

Republished from the Winnipeg Free Press print edition December 2, 2013 A11

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