What the Pros Say: Who Will Be Left Standing?
Just days after Lehman Brothers filed for bankruptcy, the last two independent investment banks on Wall Street—Goldman Sachs and Morgan Stanley—are under pressure.
And Goldman Sachs sank 14 percent on Wednesday, despite never reporting a loss during the credit crunch.
Market and investment professionals have their say on whether any investment bank can go it alone:
Shelter From the Storm
Investors seeking safe havens shouldstay committed to a longer-term outlook. Making dramatic, emotional moves “rarely proves to be good,” says Elizabeth Miller, Trevor Stewart Burton & Jacobsen. Lawrence Glazer, Mayflower Advisors, concurs and adds that while people tend to look at commodities like gold and oil, it might be wiser to stay committed to the markets in the long term.
Morgan vs Goldman
There may be enough business to support either Morgan Stanley or Goldman Sachs, but probably not enough for both, Ralph Silva from TowerGroup told CNBC, adding that he expects one of them to be bought up in the next couple of weeks.
WaMu Owes Too Much to Fail
Washington Mutual can't be allowed to fail because it owes $58 billion to the Federal Home Loan Bank System, Dick Bove from Ladenburg Thalmann & Co. told CNBC. "If Washington Mutual goes under then the Federal Home Loan Bank in San Francisco and probably the one in Seattle will lose $58 billion," Bove said.
Surival of the Least Unfit
We're looking at an industry-wide disaster and everyone's in trouble, says Ron Ianieri, chief markets strategist at Options University.
Wachovia Best for Morgan Stanley
"The best solution for (Morgan Stanley) probably is to tie up with a commercial bank and Wachovia does look (like) quite a sensible option for them," said Richard Staite, U.S. banks analyst at Atlantic Equities.
More Government Must Manage Toxic Assets
"An RTC-style (Resolution Trust Corp.-style) structure seems to be the most sensible and workable means of working through this crisis," Benjamin Pedley, investment strategist from LGT Investment Management, said.
More Mergers, More Bailouts
"More damage ahead, more mergers, more government bailouts," Nick Carn, global investment strategist at Odey Asset Management, said.
Strength in Fewer Numbers
"There is good prospect that the number of institutions will shrink further and those who will be left will be very strong indeed and certainly will enjoy the endorsement from all the regulators and central banks to keep them afloat," Georg Grodzki from Legal & General Investment Management told CNBC.
The Darwinian Survivors
The biggest and toughest companies to survive the current market turmoil will be Berkshire Hathaway, JP Morgan, Chubb and CNBC-parent GE, Mike Holland, chairman of Holland & Company, told CNBC.