No sympathy for the devils. For the last 15 years Fuld has been the guy to work for. His risk-taking brought untold riches to his employees. He was legendary for spreading the wealth that he created around his staff at the bank. Today his portrait outside the Lehman office is covered in messages of anger, quotes of Fuld saying, “Lehman is well capitalised”.

The messages I find most bizarre are the ones accusing him of greed, as if greed is such a repulsive, unnecessary requirement by bankers for their leader. His ex-employees who have basked in his golden shower for a decade-and-a-half obviously don’t feel sorry for him. I find it hard to feel sorry for wealthy, well-educated, ambitious bankers who are now turning on the man that got them where they are. — Guardian

After 73 years, the last gasp of the broker-dealer. It seems to me that Goldman and Morgan Stanley have two options. One is to follow Merrill and sell out to a large commercial bank with a big capital and deposit base. That could provide them with sufficient backing for their capital markets divisions, which can be revenue and profit powerhouses in good times.

The second is to scale back heavily, or abandon, their broker-dealer arms and become more like big hedge funds or private equity funds. In Wall Street jargon, this would involve a switch from sell side to buy side, where most money is now made. In exchange for becoming much smaller, they might retain their high margins.

My guess is that Morgan Stanley will opt for the first and Goldman for the second. It is sad to witness 73 years of investment banking history end this way but there is no use in denying it. Goodbye to all that. — John Gapper, Financial Times

A sense that Wall St.’s boom times are over. The old Wall Street is giving way to a new one. As the tectonic shifts within the American financial industry shook the world’s markets on Monday, many experts predicted that events of the last 72 hours heralded a new period of painful change for Wall Street.

The predictions were sobering. Investment banks will be smaller. Their profits will be leaner. Jobs in finance will be scarcer. And the outsize role of Wall Street in the nation’s economy will shrink.

That is the extreme case. But as investors tried to comprehend the abrupt downfall of two of Wall Street’s mightiest firms — Lehman Brothers, which spiraled into bankruptcy, and Merrill Lynch, which rushed into the arms of Bank of America — even optimists said the immediate future would be difficult. Treasury Secretary Henry M. Paulson Jr. and the Federal Reserve are paving the way for the few strong survivors to lead an industry turnaround, while letting the weaker ones fail or be subsumed by larger rivals. — New York Times

The resilience of American finance. The turmoil in the financial markets will reorganize the financial landscape. But this does not mean the financial industry will shrink dramatically. In fact the current crisis could well lead to an increase in the demand for financial services, as the world grapples with the need for new financial instruments, new risk management techniques, and the increasing complexity of the financial world.

There is no doubt that some of the most hallowed names in the industry, such as Bear Stearns, Merrill, Lehman and others will disappear as separate entities. Their demise was caused by bad risk management, and a failure to understand the high risks of an overheated real-estate market, the root cause of our current problems. – Wall Street Journal

How not to lose everything. Over the past year, Merrill Lynch and Lehman Brothers have provided a crash course in how to destroy century-old Wall Street firms. One company’s shareholders are walking away with a $50 billion consolation prize in the form of a merger with Bank of America, however, and the other’s are getting hosed.

The difference is that Merrill Lynch’s CEO, John Thain, played his cards wisely, while Lehman’s CEO, Dick Fuld—along with the CEOs of Bear Stearns, Fannie Mae, Freddie Mac, Washington Mutual, and many other financial-services companies — didn’t.

Merrill’s Thain is a former president of Goldman Sachs and CEO of the New York Stock Exchange. He was brought into Merrill last fall to fix the damage wrought by his predecessor, Stan O’Neal, the man who bears primary responsibility for Merrill’s collapse. Thain’s decisions can’t be evaluated without understanding what he found when he got there, so here’s some quick history. — Slate

Peter Fray

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