The New Wall Street

The days of the large investment banks are over. Most people know that Bear Stearns, Lehman, and Merrill are not here anymore. Of course, Merrill is part of Bank America but it is a shadow of its former self. Goldman and Morgan Stanley are now commercial banks and the large banks have been considerably weakened.

For decades, Wall Street has attracted some of the brightest young men and women to generate enormous profits for their firms and themselves. Investment banks handsomely rewarded creativity, intelligence, trading ability, risk taking, salesmanship, and investment acumen. Profits were high and multimillionaires were created. Much of that wealth helped to spur the financial crisis we have today.

However, without independent investment banks, risk taking is likely to diminish and the entrepreneurial spirit will vanish. We contend that the Wall Street landscape will evolve over the next few years. Perhaps the commercial banks won't be able to attract many of the rocket scientists and medicine and education will benefit from this migration. This would be a welcome trend for the future of the United States.

What will Wall Street look like in a few years? If the traditional bonus system is being eliminated, their will be a mass exit from the big banks. Many new boutique firms will open their doors. These firms will allow for the entrepreneurial spirit to be rekindled and profits to soar again. The Wall Street tycoon won't be a hedge fund manager or a prop trader at a large bank but it may be the CEO's of a new M&A boutique or a bankruptcy advisory firm or a small high yield sales and trading operation. Many new firms will open their doors as the exodus of brains and talent leave traditional Wall Street in search of big bonuses and freedom to prosper in an entrepreneurial environment again.