They’re also calling the historic move—which more or less reverts the state of U.S. banking to pre-Glass Steagall/pre-New Deal days, before provisions were enacted that separated investment banking from commercial banking—the end of Wall Street (what were considered the bulge bracket firms on the Street will soon all gladly accept regular guys and gal’s cash deposits so Main Street will now be the more apropos rue upon which these formerly white-collared institutions will reside), the end of the big trading bet (Goldman and Morgan, as holding firms, now must maintain lower leverage ratios, preventing them from being able to bet on long shots at the track, so to speak, forcing them to keep their cash on frontrunners who pay out at about 15 to 1 or less) and, sadly, the end of the big banker bonus (if you can’t bet big, there ain’t no way you’re gonna win big).
Indeed, it’s hard out there for an investment banker these days, especially when you got the rent, rhinoplasty and facelifts to pay for. The new and Murdoch-ed if not improved Wall Street Journal, which recently received a facelift of its own, today ran a piece on how the financial crisis has been hurting the wealthy, and let me assure you, it’s not a pretty sight, given all the massive noses and wrinkled faces running rampant all over Manhattan and Connecticut.
Meanwhile, back in D.C., the Republicans and the Democrats are fighting it out. Looks like the red corner is a little peeved that the blue corner wants to add a few provisions before passing the big Bush-backed bailout, and how can you blame them? It’s only $700 billion, just sign the damn thing already!
Finally, in other dour news, Sallie Krawcheck, the head of Citigroup’s wealth management arm since 2004, left the firm today, following on the (high) heels of other top female bankers to make their exits this year (such as Morgan Stanley’s Zoe Cruz and Lehman Brothers' Erin Callan), leaving few powerful women left in the business perhaps soon-to-be formerly known as investment banking.
Everyone and their mother’s favorite industry observer are calling Goldman Sachs and Morgan Stanley’s change in status to bank holding company the end of the independent investment bank as we know it.