With Bank of America buying Merrill Lynch, and Lehman brothers heading into Chapter 11, Goldman Sachs and Morgan Stanley are the last major independent investment banks standing on Wall Street. But having survived as the fittest doesn't guarantee an easy ride, reports the Wall Street Journal, as both will have to deal with continued market fallout —and belatedly tighten their belts.
Both are set to report scaled-back profits this week, and face tough credit markets and deal-making doldrums that will pare profit and revenue, forcing them to slim down their workforces. The industry has been reluctant to downsize, waiting for the credit-market chaos to pass, but says one analyst, "This is about to change." But the slimming down might now be mitigated, says another expert: "That's already been done for them by Bear and Lehman."