On The Turning Away

It’s perhaps fitting that on the last summer day of 2008, the end of a swashbuckling Wall St era falls on a day when New Yorkers bid farewell to Yankee Stadium. The latter’s planned demise marks the untimely death of standalone investment banking all the more poignant, and prompts many a soul-searching moment: is it the beginning of the end for New York as we know it?

Of course, any self-respecting New Yorker would shoot down the idea in no time. But changes … they are a-comin’. Perhaps all the doom-and-gloom is really a blessing in disguise lest the latte-sipping, arugula-munching city sophisticates go over the cliff over Sarah Palin.

While the Yankees will get a new controversial stadium, the future of i-bankers is far from clear now that the ga-ga days of money-making seem…so quaint. If it’s any consolation, the fun lasted a good 73 years – Morgan Stanley opened on Wall Street on Monday September 16, 1935 when Stockbrokers at J.P. Morgan were pushed out to stand on their own by the 1933 Glass-Steagall Act.

The disappearance of last two standing investment banking houses amount to no less a blunt acknowledgment of the limits to their brash model than the ignominious death of Lehman Bros. Market historians will debate the questions about Wall Street’s metamorphosis from chiefly a client-facing capital market agent to a once hugely profitable principal in the ever-quants-driven derivatives game.

For the onlookers, we’d say look on the bright side.