Is investment banking really dead?
With the acquisitions-under-duress of Merrill Lynch and Bear Stearns by Bank of America and JPMorganChase, respectively, the bankruptcy of Lehman Brothers and the application to be regulated as bank holding companies by Goldman Sachs and Morgan Stanley, many commentators spoke of the end of the independent investment banking. Such talk, more common in the popular press than in the financial press, reflects a confusion of form for function. The bulge bracket US investment bank, regulated exclusively by the SEC, is clearly not going to return, but sophisticated professionals who issue securities, provide advisory services, and do market-making are not going anywhere for the simple reason that these activities remain central to the financial market in the US and other developed markets.28 Actually, the current prognosis for the industry is perhaps relatively upbeat as the number of competitors has thinned out with the withdrawal of several second-tier players, an outcome that should be av
