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You have to remember all the large investment banks have now either been absorbed by bank holding companies, filed for bankruptcy, and have reorganized into bank holding companies.

The biggest problem in the past has been over leveraging investments, and running the risk of becoming illiquid and this still is a concern for current "pure" investment banks.

For the big ones that have either merged into or become bank holding companies, their depositors are insured by FDIC. This means the are mandated to not exceed a maximum leveraging ratio, so future liquidity concerns are much smaller. Though this seems good, the maximum leverage is a double edged sword. They used to offer investors very high levels of interest, which they can no longer do. So the biggest threat to the old big investing companies comes mainly from competition of other financial intermediaries.

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15y ago

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