The following editorial first appeared in the Chicago Tribune:
When Christine Lagarde begins her job as managing director of the International Monetary Fund on Tuesday, she will step into one of the most powerful finance jobs in the world at a time of instability both inside and outside the global lender. She will also be a rare commodity at the top of the IMF: a woman.
The IMF needs, more than anything, strong leadership right now. Greece’s debt crisis threatens the worldwide economic recovery. Emerging market leaders from China to Russia to Brazil are demanding a bigger say in the IMF, which is traditionally run by a European. And the IMF’s internal workings are in flux following the departure of director Dominique Strauss-Kahn, who resigned in May after he was charged with sexually assaulting a New York hotel maid. He denies the charge, and new questions about the credibility of the maid have put that case in jeopardy.
Some critics assert that Lagarde’s lack of economic training — she is a corporate lawyer, not an economist — leaves her unqualified to run an institution heralded as a temple to global economics. But those who know her say that argument is weak. Lagarde, most recently the French finance minister, brings substantial credentials to her new post. The 55-year-old Parisian is known as a shrewd negotiator, effective manager, superb communicator and a no-nonsense consensus builder.
She has ample qualifications and she has some experience in shattering glass ceilings. In 1999 she was named the first woman to lead the giant Chicago law firm Baker & McKenzie.
Let’s face it, the IMF needs some shattered glass.
To secure the top post, Lagarde had to win over the IMF’s board of 24 administrators — all men.
“When I was questioned for three hours by 24 men, I told myself that it was a good thing that things would change a little, and that we should each contribute our differences, our respective qualities and occasionally a different way of seeing things,” she told Reuters. She will be the first woman to hold the job of managing director.
Does gender make a difference in finance? There’s evidence that it does at many levels.
A 2007 study from Catalyst, a New York-based organization that monitors women’s progress in the workplace, found that Fortune 500 companies that had the highest representation of women on their boards of directors achieved a significantly higher financial performance, on average, than those with the fewest women at the helm.
Economists studying global poverty have found that developing nations fare better when women control the purse strings.
As documented in the book “Half the Sky: Turning Oppression Into Opportunity for Women Worldwide” by Nicholas D. Kristof and Sheryl WuDunn, microfinance groups typically focus their loans on women because the investment nets a greater economic return. The book describes “the dirty little secret of global poverty,” that when households in developing countries get money, men frequently spend it on alcohol and prostitutes while women spend it on education and starting small businesses.
Expect Lagarde to be outspoken on gender and finance. She often quips that “too much testosterone” leads to trouble in the financial sector. The 2008 financial collapse was at least in part driven by the aggressive, testosterone-fueled mood of male-dominated trading rooms, Lagarde said in a February interview with The Independent.
“Gender-dominated environments are not good ... particularly in the financial sector where there are too few women,” Lagarde told the British newspaper. “In gender-dominated environments, men have a tendency to ... show how hairy chested they are, compared with the man who’s sitting next to them. I honestly think that there should never be too much testosterone in one room.”
The IMF is in for some welcome change.