Predictions Of The Death Of Investment Banking May Be Premature
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'It is tempting to dismiss the financial services industry in general and investment banking in particular, but such conclusions might be premature.
Despite the disappearance of investment banks, investment banking as a business still exists and its recovery powers may surprise. Competition has diminished. The collapse of Bear Stearns and Lehman Brothers creates opportunities for those still standing. Demand for investment banking products and services will eventually recover, as depressed asset prices force some businesses to restructure....
It is also worth remembering that the financial services industry's practitioners are the mothers of reinvention......Imaginative financiers will strive to come up with new products, forge new relationships.....If regulation gets too heavy-handed, they will point to America's Sarbanes-Oxley overreaction to the dot.com scandals of 2001-03. That crisis is a good example of how unexpectedly the financial services industry can bounce back. Wall Street had become synonymous with greed and sleaze; investment banks were laying off people and reporting huge losses; and there was widespread conviction that the system had to change.
Yet through a rearguard action, the financial services industry deflected the criticism and protected its business model. After a couple of years of contrition, it was reporting record profits and was back at the top table in Washington.
This time round, the industry is starting from further back, the political environment is different and the industry will certainly have to adapt to new rules. But unless politicians' actions for once match their rhetoric, I, for one, am not going to write it off'.
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