There will, of course, be investment banks in future. But they will be smaller, specialist institutions, like the merchant banks of old. There are plenty of advisory firms, hedge funds and private equity funds and this Wall Street crash will create more. All of those unemployed financiers will need something to do.
The full-service investment bank, buying and selling shares and bonds for customers as well as advising companies and trading with its own capital, is doomed. In order to generate the revenues needed to match larger institutions, banks such as Lehman scurried into risk-taking that eventually sunk them.
