By Claire Zillman

Things did not look right to Rep. Al Green (D‑Texas).

It was April of this year, three hours into a grilling of the CEOs of seven of the largest U.S. banks before the House Financial Services Committee. The hearing was to focus on the accountability of the banks, 10 years after the financial crisis. 

But Green, an eight-term congressman representing parts of Houston, had decided to discard his prepared questions and pursue a different line entirely. Looking across the row of CEOs—Michael Corbat of Citigroup, Jamie Dimon of JPMorgan Chase, James Gorman of Morgan Stanley, Brian Moynihan of Bank of America, Ronald O’Hanley of State Street Corp., Charles Scharf of Bank of New York Mellon, and David Solomon of Goldman Sachs—he put it bluntly.

“The eye would perceive that the seven of you have something in common,” Green said, slouching over his microphone. “You appear to be white men. You’ve all sermonized to a certain extent about diversity,” he continued. “If you believe that your likely successor will be a woman or a person of color, would you kindly extend a hand into the air.” Taking a physical tally is a common exercise for Green—he likes the optics of it.

No CEO raised his hand; in fact, the panelists flinched a little, like schoolboys caught misbehaving. “I know it’s hard to go on the record sometimes,” Green said. “But the record has to be made. All white men and not one of you appears to believe your successor will be a female or person of color.”

Even as diversity initiatives and the #MeToo movement work to recalibrate corporate power dynamics across a range of industries and workplaces, Wall Street has remained terra incognita for women trying to reach the highest rung. “In theory, this is an analytical business, and what should matter here is performance. And yet in the most analytical of industries it hasn’t mattered,” says Sallie Krawcheck, cofounder and CEO of Ellevest and once one of the highest-ranking women on Wall Street. The question of why a woman has never run a Wall Street bank is “not a new question,” adds Wendy Cai-Lee, now CEO of Piermont Bank, who worked at both JPMorgan Chase and Citi. It’s one “we constantly ask ourselves.” 

It’s especially striking given that industry after industry has seen the ascension of a female CEO: BAE Systems’ Linda Hudson in defense in 2009 (to be followed by many others), General Motors’ Mary Barra in autos in 2014, Occidental Petroleum’s Vicki Hollub in oil in 2016, and GlaxoSmithKline’s Emma Walmsley in pharma in 2017. Women have ascended to the top ranks of banks overseas; indeed Ana Botín is the chairman of Banco Santander. Fortune started tracking female CEOs on the Fortune 500, which ranks firms by gross revenue, in 1998. Since then it has identified only two female bank CEOs. The first was the late Marion Sandler of Golden West Financial, which she founded with her husband and was bought by Wachovia in 2006. The second is Beth Mooney, CEO of KeyCorp, a regional bank based in Cleveland, which ranked No. 413 on this year’s Fortune 500. 

It’s not all bad news. Outright sexual harassment, the type that turned mostly male trading floors into petri dishes of misogyny decades ago, is less commonplace. Leaders have avowed the need to be inclusive and have tweaked recruiting machinery to nearly achieve gender parity among starting classes. The obstacles that remain are the smaller, more subtle barriers that range from “microaggressions” to “over-mentoring” and “under-sponsoring.” Fortune interviewed more than a dozen women who are veterans of banking and finance for this story. Some didn’t want their names used because they wanted to speak candidly about former employers. But their stories shared common threads of the cultural factors that are keeping the boys’ club in place. 

What they told us? Women want to be CEOs but are deemed not quite ready. Boards and shareholders say they want diverse leadership, but just can’t quite seem to find the right candidates once the top job opens up. All told, Wall Street finds itself at a standoff. 

The irony is, this particular glass ceiling looked as if it might soon be broken—over a decade ago. Back in the mid-2000s, Zoe Cruz was copresident of Morgan Stanley and was seen as a possible successor to CEO John Mack. In late 2007, Erin Callan had ascended to CFO of Lehman Brothers at age 41. And Krawcheck had a stellar string of successes at smaller firms—even landing on the cover of Fortune—before being named CFO of Citigroup. 

“The Sallie, Zoe, Erin trifecta,” Krawcheck recalls. “We were the three senior ones.” 

The financial crisis, however, upended the careers of all three women. Cruz left in November 2007, shortly after Morgan Stanley’s write-downs related to the subprime mortgage crisis. Callan resigned in June 2008 after Lehman posted a $2.8 billion quarterly loss; the firm filed for bankruptcy three months later. Krawcheck, meanwhile, departed Citi in 2008 over disagreements with the CEO; the next year she took a job running Merrill Lynch’s global wealth management unit, but she left that position two years later.

It’s logical to think, says Krawcheck, that the global reshuffling precipitated by the crisis would have caused the industry “that’s been white, male, and middle-age” to reconsider the demographics of its leadership. Instead, as Krawcheck puts it, “it became whiter, maler, and middle-age-er.” And the fact that the crisis itself seemed to have been precipitated by a particularly, ahem, testosterone-driven style of risk-taking and decision-making did not necessarily sink in in some circles. As Christine Lagarde, the former managing director of the International Monetary Fund, has famously opined: If Lehman Brothers had been “Lehman Sisters,” the economic crisis “clearly would look quite different.”

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They leaned in over a decade ago. Zoe Cruz, formerly of Morgan Stanley, seemed poised to ascend to the CEO job.
Erin Callan resigned as CFO in June 2008 after Lehman posted a $2.8 billion quarterly loss; the firm filed for bankruptcy three months later.
Sallie Krawcheck (Citi) seemed destined to ascend to CEO as well. But the financial crisis wiped out a wide swath of executives, leaving the field “whiter, maler, and middle-age-er,” in Krawcheck’s words.

Indeed, there’s a case to be made that Wall Street needs more women at the top. 

A 2018 IMF study identified the benefits of female leadership of banks worldwide, at least at the board level. It found that institutions with larger shares of women directors had higher capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress. The same relationship exists between bank stability and the presence of women on banking regulatory boards. “We find that the observed higher stability is most likely due to the beneficial effects of greater diversity of views on boards,” the authors write. They also note that due to discriminatory hiring practices, women who reach the board level tend to be “better qualified or more experienced” than their male peers. All told, the evidence “strengthens the case for closing the gender gaps in leadership positions in finance.”

That argument seems to have registered with megabanks’ current CEOs, or at least they indicate so publicly. All seven who attended the April congressional hearing submitted prepared remarks mentioning their bank’s diversity efforts, with some acknowledging that progress is still needed. Diversity is “essential to … driving responsible growth,” said Bank of America’s Moynihan. Bank of New York Mellon holds “executive committee members and hiring managers accountable” for achieving workforce representation goals, said CEO Scharf. 

State Street CEO O’Hanley’s remarks on the matter were by far the sharpest. He said the firm stepped up its diversity efforts, in part, because the financial crisis “cast a bright light on the dangers of groupthink in corporate leadership.”

But as women well know, what happens to a decades-long career inside an institution isn’t the result of big proclamations. It’s the result of a thousand tiny interactions and decisions. Some her choice, some not. Some assignments not offered, some cocktail parties not attended, some business trips not booked. 

We know this. Out of college, women start—at least on paper—on equal footing on Wall Street. (For the purposes of this article we looked at the problems of gender parity; our sources stressed that other kinds of diversity—of ethnicity, economic background, sexuality, among others—are equally important to address.) Women now account for 51% of entry-level jobs in banking and consumer finance, according to 2018 research by McKinsey that surveyed more than 14,000 employees at 39 financial services firms. By the time you get to the C-suite that number is 20%.

“I think we’ve been okay at bringing women and minorities into the firm,” Citi CEO Michael Corbat said at a Fortune event in June. But “as fast as you can bring in these talented people, you’re losing them,” he said. 

Some industrywide data, however, contradict this. “Often people [think] that the pipeline is leaky, that we lose women at every stage because they take on roles in the home or leave for part-time opportunities,” says Marie-Claude Nadeau, a coauthor of the McKinsey study. In fact, the rates at which female employees leave banking and consumer finance is lower than attrition among their male counterparts. For instance, 18% of male entry-level employees are lost to attrition versus 16% of women in such roles; at the senior VP role, it’s 10% compared with 9%. 

Interestingly, one of the few places in finance where male vs. female performance can be measured with some degree of accuracy is in mutual fund performance. A fascinating study by Morningstar looking at data over 15 years had a surprising finding: Fixed-income mutual funds run by women have outperformed those run by men since 2003. Such findings led Morningstar to conclude that “the low participation rate of women in the industry is not justified by performance.”

But elsewhere in the industry, where gains can’t be quantified to the percentage point, gauging performance is not so clear-cut. Many women I spoke to said it was the experiences not offered, the assurances not given, that, in the end, landed women just shy of the C-suite.

JPMorgan stands out with three women, from left—consumer lending CEO Marianne Lake, CFO Jennifer Piepszak, and asset and Wealth Management CEO Mary Erdoes. JPMorgan Chase said in 2018 that Jamie Dimon will be CEO another five years, but already each of the three above have been mentioned as possible successors.

The first obstacle many women face is their first promotion. Eight percent of women in early-tenure jobs, according to the McKinsey study, are promoted, while 10% of men are. “Women are half of hires,” says Alexis Krivkovich, another coauthor of the study. By the time they get to the C-suite, the one-fifth of occupants tend to hold “functional” roles (head of HR, general counsel), with a smaller share holding business-line jobs that typically feed into CEO-candidate slates. 

McKinsey found several reasons for the lack of interest some entry-level women had in pursuing leadership positions, including lacking passion for the work itself, the challenges of work/life balance, the “perceived” stress of such jobs, and the politics at play. Even if women do aim high, “they often lack the support needed to rise to the top,” according to McKinsey. The underrepresentation of women in firm leadership means there are few role models to serve as counterpoints. 

“That first promotion gap is really critical,” says Krivkovich; it shrinks the female talent pool from which leaders are plucked. But for the women who do get promoted, soon another factor starts to come into play. Women in mid-level management often exist just outside the inner circle. Their male peers, for instance, might accumulate critical information more easily. That, in turn, helps determine who gets the best accounts or assignments the next year; it’s Joe instead of Jane. “Nobody at the moment feels we’re doing anything wrong, but that’ll be the biggest deal for the group, and it means Joe’s gonna get paid more than Jane,” says a 20-year veteran of Wall Street. “That little microissue that disadvantages women becomes emphasized over time.” Donna Milrod, head of State Street’s global clients division, previously spent 20 years at Deutsche Bank and has witnessed a similar dynamic at work. “Microaggressions is too negative; I’d call them microdecisions.” She adds, “It’s the small things, like men going out for a drink or men taking a business trip together.”

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And, to be sure, there are still pockets of sexism in the industry broadly—the rampant kind as well as subtler versions. A female banker in early September won a gender discrimination case against BNP Paribas. She had claimed her boss often dismissed her by saying, “Not now, Stacey,” a phrase her other colleagues picked up. In one instance, she says, someone left a witch’s hat on her desk. The Wall Street veteran who spoke to Fortune remembers arriving to meet the CEO of a multinational who asked, “Who’s the guy running this meeting?” “I said, ‘I’m running this meeting, and I’m here to talk about taking your company public.’ He looked at me like I was from Mars,” she recalls. She also encountered surprise from a male coworker when she returned from maternity leave; he had thought she would stay home given her warm, motherly vibe.

So, about that “mom” thing. 

Almost all the women I spoke to recoiled at the rationale that women leave work because they want to be stay-at-home moms; that’s too simplistic an explanation. It’s more about the calculus involved. It’s that they have the perception that they have less opportunity, says the Wall Street veteran, and “on average it’s true.” 

“It’s not that they’re going home because they have kids; they go because of the tradeoff,” she says. “If a woman with kids is told, ‘You’re a star, you’re compensated fairly, you’re the future of the firm, you’ll be CEO,’ there’s no way she’s leaving even if she has kids at home. The point is, women are not being told that at all. Instead, they’re [thinking], ‘I have three other guys promoted ahead of me, I’m getting paid well but not at the top of the class, I’m muddling along, but I’m not the favorite child.’ ” 

This is backed up by a 2016 report on financial services firms globally by Oliver Wyman, which flags a “mid-career conflict” as especially problematic for women in the field. Women start out with the same ambition level as men. They retain that ambition for the first few years of their careers, and they have similar ambition later in their careers. It’s the middle that’s troublesome. At that stage, women “vote with their feet,” the study says, pointing to labor market data that shows women in that stage are more likely to leave their financial industry jobs than their male colleagues and are more likely—by some 20% to 30%—to exit versus women in other industries. That trend emerges at a time when women ages 30 to 50 are less willing to sacrifice their private lives for the sake of their jobs, a shift in attitude that doesn’t show up nearly as strongly among men. 

Firms tend to hire “overachieving women” who’ve “always gotten good grades and been terrific at what they do,” says a former managing director in investment banking at a Wall Street firm. As their careers progress, the laws of attrition mean things get tougher—“they get the first C in their lives”—and it comes “right at the time when they’ve established a partnership or married a spouse and maybe had a child,” she says. “The cost of being [at work] is going up.”

While some women do end up leaving finance for other industries, for those who continue to climb, it’s vital these days to rack up tons of exposure to different parts of the business. Operational—versus functional—­experience is especially crucial. “Running a division as a general manager or president or CEO with P&L responsibility is important to prove leadership and accountability for an entire organization,” says Jeanne Branthover, head of global financial services at executive search firm DHR International. Often leaders “will have worked in different cities and countries to learn firsthand the inner makings of the organization.” 

Several women mentioned being overlooked for such stretch assignments or relocations. There’s perhaps not outright discrimination, but there’s an assumption that women, especially those with families, won’t want to take on a giant project or, say, move to San Francisco. Finally, for the women in finance who manage to stay in the game, take the tough assignments, get to the inner circle, a crucial piece of the puzzle is mentoring. 

Interestingly, women are actually more likely than men to have mentors, yet, as a report from researchers at Insead and Catalyst bluntly puts it: “All mentoring is not created equal.” Women have a tendency to form relationships with mentors with too little organizational clout, meaning they’re less able to sponsor or go to bat for women aiming for the next level. “That’s a real disadvantage,” the study says, “because the more senior the mentor, the faster the mentee’s career advancement.” 

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The McKinsey research adds further nuance, calling out the gender makeup of women’s networks specifically. Some 81% of entry-level women in financial services cultivate networks that are largely female or evenly split between men and women, meaning their networks will have fewer and fewer women who can serve as advocates as their careers advance since the upper echelons of management are mostly men. Meanwhile, men don’t have this problem since they are far more likely to cultivate networks that are mostly male.

“What I saw time and time again, around key [managing director and partner] promotions is if you have a strong woman and you have a strong guy—two people up for that next job—unless you have someone pushing for the female candidate, they’ll say, ‘She can wait another year,’ ” says the former managing director. A woman is perceived to be more loyal to the firm, she says, meaning there’s less incentive to ensure she’s satisfied. “Banks won’t do anything that they don’t have to do,” she says. 

Beth Hammack, global treasurer of Goldman Sachs who was named to the firm’s management committee in May, identifies two important mentors: CEO David Solomon and CFO Stephen Scherr. She says the firm has a “long history of women pulling up other women,” but the reality is she’s had to have men “looking out” for her. 

One of the few women with perspective on what it takes to overcome all these obstacles? KeyCorp’s Mooney, who started her career in the late ’70s and held positions at Bank One, Citicorp Real Estate, Hall Financial Group, Republic Bank of Texas/First Republic, and Alabama-based AmSouth Bancorporation before joining her current firm. “I [took] on any opportunity that came my way,” she says. “I had people who gave me the chance and allowed me to prove myself.” In practice that meant she moved nine times in 16 years. She volunteers that her status as a single woman allowed for such flexibility. “My path is not everybody’s path,” she notes. 

Which brings us back to the question: Who will be the first woman to run a major American bank? 

Earlier this year there was some thought that troubled Wells Fargo, which is on its third CEO—an interim appointment—since its fake-account scandal came to light in 2016, would be a candidate. More recently, there have been noises that the bank will instead appoint a retired CEO (a group that is by definition male) as its leader.

State Street, for one, admits that women are not “matriculating” up the organizational ladder at the same rate as men. In response, the bank has lowered some barriers that might keep employees—women especially—from pursuing new opportunities within the company, like tenure requirements for applying for internal openings. This is important, as “rigidity” is something that came up again and again as a factor that sets Wall Street apart. The industry is old. Several women cited a hierarchy and system of advancement that doesn’t allow for the flexibility that some women might seek. Others, specifically in investment banking, pointed to the fact that Wall Street has been slow to adapt given that their customers are CEOs of other companies, who are—by and large—also male, meaning there has historically been little pressure to add women to key teams. 

But that too is changing. State Street introduced a practice in 2017 that incorporates diversity targets into executives’ performance reviews and compensation. “It’s definitely the case that what gets measured gets focused on and gets managed,” says Kathy Horgan, chief human resources officer. Goldman Sachs now requires managers to interview at least two qualified “diverse” candidates for each job at more experienced levels.

Among those interviewed for this article, there was consensus that there is at least a chance a woman will be tapped to take over the top job under the leadership of Jamie Dimon at JPMorgan Chase. There, a new trifecta of female execs have emerged as possible successors: consumer lending CEO Marianne Lake, CFO Jennifer Piepszak, and asset and Wealth Management CEO Mary Erdoes.

Two days after the congressional grilling in April, JPMorgan reported earnings, and Dimon was asked about his testimony—and his successor.

“[We] don’t comment on succession plans. That’s a board-level issue,” he said. “[We] have exceptional women. And my successor may very well be a woman, and it may not. And it really depends on the circumstance.” 

The circumstance is that this milestone is long overdue. 

So, Michael Corbat. Jamie Dimon. James Gorman. Brian Moynihan. Ronald O’Hanley. Charles Scharf. David Solomon. 

Who’s going to raise his hand first?

A version of this article appears in the October 2019 issue of Fortune with the headline “The Last Boys’ Club.”

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