NEW YORK — Goldman Sachs and Morgan Stanley, with three of their rivals vanquished this year, on Tuesday vowed to remain independent as Wall Street faces its biggest shakeout since the Great Depression.
The last two major independent investment houses both posted third-quarter profits despite continued chaos in the financial markets. And, their top brass rejected suggestions they must find partners to survive the ongoing credit crisis.
Global banks and brokerages have written down more than $350 billion from wrong-way bets on mortgage investments and other risky securities during the past year. The upheaval in the U.S. financial system has driven Merrill Lynch & Co. and Bear Stearns Cos. into emergency sales, and Lehman Brothers Holdings Inc. into bankruptcy.
Now analysts are questioning if the stand-alone investment banks need to partner with commercial banks.
“You’ve got to get out while the going is good,” said Manny Weintraub, a former managing director of Lehman Brothers’ Neuberger Berman unit and founder of Integre Advisors. “Because I think the whole business model of a brokerage firm is broken.”
Commercial banks tend to have slower growth but more dependable earnings since a bulk of the business comes from retail operations.
