Ramius Capital's Peter Cohen says Wall Street is going "back to the future" and after the dust settles on the credit crises, the big firms could ultimately look more like they did in the 1980s.

"We're going to look like we did in the mid '80s with manageable balance sheets. You'll know all the risk on the balance sheets," he said.

Wall Street firms have been deleveraging as they make their way through the credit crunch. Cohen once was ceo of Shearson Lehman, and I thought he might have interesting insight into how the firms might evolve. He does not see a wave of mergers for the securities firms but there may again be investors willing to put capital up if the price is right. "The problem is everybody who stepped up is under water," he said.

"If you could, you'd merge Lehman into someone but the problem is everybody has everything," he said in a quick interview after his appearance on "Squawk Box." (see clip below.)

Cohen reminisced a bit about how Wall Street used to have dozens of firms. When he was with Shearson, the firm bought 40 different firms between 1971 and 1988. Shearson merged with Smith Barney and is now part of Citigroup

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He said he does expect mergers of regional banks and even major banks. I asked him about Citigroup and whether its new ceo Vikram Pandit will turn the tide there. "What happens to it? I think anything. The question is whether the markets will give the firms time," he said.

As for the stock market, I asked Cohen whether he sees a bottoming out as some traders believe. But he offered no cheer on that front.

"I think the worst is yet to come. I think we've got a tough year, year and a half to get through. Things aren't getting any better in the financial system. They're getting worse," he said. He said a friend who is ceo of a major home builder tells him things are still deteriorating, and he doesn't yet see a bottoming in housing.

Cohen founded Ramius Capital Group in 1994. It is a global alternative investment firm with $11 billion in assets.

Questions?  Comments?