As heads spin and iconic Wall Street companies disappear, thefinancial industry diminishes before our very eyes. How many jobswill be lost in these various shotgun marriages, bankruptcies, andshut downs? The toll will be huge -- many tens of thousands,including a high percentage of big ticket bankers and traders.Poof. And they won't be coming back anytime soon.
Once re-energized regulators get through, all those sleight ofhand transactions, which created a Wall Street fee bonanza over thepast decade, will either be eliminated or become prohibitivelyexpensive to undertake. So long credit default swaps and CDOs. Whencompanies finally recapitalize, lending activities will beconstrained by conservative underwriting requiring strong creditfrom borrowers, and without free flowing leverage, transactionactivity will be muted for quite a while. What's left ofthe industry won't need all those bodies for trading,flipping, tranching, slicing and dicing. Surviving bankers mayactually focus again on financing new industries, goodcompanies,and sound real estate projects which actually createlong-term value in the economy instead of stratospheric year-endbonuses.
For real estate it will be back to basics -- more long-termbuying and holding and a focus on asset management and leasing.Everyone will be making less -- fewer transactions translate intoless fees.
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