In this article from MarketWatch, we get a good summary of what's ailing the financial system these days. The crisis in the "shadow banking system" is likely to bring the brokerages (Lehman, Merrill, etc.) under the regulatory umbrella of the commercial banks, which means lower leverage and lower profits. Like in London after the "Big Bang", you're likely to see the old independent US brokerages, themselves searching for a larger capital base, get swallowed up by big commercial banks. If this occurs, we'll basically be seeing a transatlantic banking system dominated by large, regulated "universal banks" like Deutsche Bank, UBS, Credit Suisse, JP Morgan, Bank of America, Barclays, RBS, ING, Citigroup and HSBC.
It's the end of an era, but not necessarily a change for the worse. A little less exciting, perhaps, but as Bank of America CEO Ken Lewis put it, as a nation we've "had all the fun [we] can stand in investment banking" for a while.
