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When Ivy Grads Pick Teaching Over Wall Street: William D. Cohan

17.05.12

Dec. 27 (Bloomberg) -- We are witnessing the decline and fall of the investment-banking profession as we have known it for the past 40 years.

The evidence is everywhere. The increasing regulations on Wall Street -- as required by the Dodd-Frank law and still being written by the Federal Reserve, the Securities and Exchange Commission, the Commodities Futures Trading Commission and others agencies in the U.S. and Europe -- will require the remaining companies to increase their capital, curb their risk- taking and reduce their principal investing.

Aside from the fact that investing principal and proprietary risk-taking per se had nothing to do with the recent financial crisis -- and that the ability of Goldman Sachs Group Inc. to make a huge proprietary bet against the mortgage market probably helped saved the firm -- these new rules will greatly curb Wall Street’s revenue and profitability at a time when the business itself is suffering a severe slowdown. (What sunk Wall Street in 2008 was the seemingly more conventional business of being a middleman for the manufacture, packaging and sale of increasingly risky mortgage-backed and other debt securities.)

Source: BusinessWeek