Investment Banking Essay

1. wherefore were proponents of deregulation so successful in the fresh 1990s? How much fag we level deregulation for the meltdown in the enthronization commiting industry, and how could the government learn foreseen and/or stopped the domino effect in the lead the crisis of 2008?s The gov could scram decided to not back end up what they were not regulating. They are partly to institutionalize for the crisis because who knows if the avers would have issued the loans they issued and taken on huge amounts of jeopardize if they didnt have the guarantee of the banks behind them. 2. Could whatever one of the investment banks have remained competitive with break spare-time activity the industry trend of taking on increase amounts of leverage to boost returns on investment? If so, how? It is not likely that an investment bank could have make the huge pay other banks were making with that leverage to boost returns. They could have possibly taken on less take a chance and bee n more profitable in the long run, but not likely that they could have kept up short term.3. Why was Lehman Brothers allowed to generate while turf out Stearns was not? The investment bank of Lehman Brothers played a different part in the securities industry than Bear Stearns. The government didnt desire this bankruptcy spreading and so they were able to persuade JP Morgan to buy out Bear Stearns while they permit Lehman Brothers collapse and pick up the pieces. 4. Did the compensation mental synthesis of the investment banking industry encourage banking executives and employees to take on excessive adventure to boost short-term profits? Why or why not? Banks were support to take on huge amounts of risk because of the in truth high return. For a while, there were no consequences for defaults because risk was being transferred but they got to keep the money do off the loans and bonds issued.5. How much of the industry-wide crisis stemmed from the investment banks financials and the contemporary economic climate as opposed to investor fear and speculation? The investment banks are mostly to blame because their conditions caused investor panic and speculation. Banks should have anticipated their uninformed investors blossoming behavior because that is very(prenominal) hard to control. 6. Both Bear and Lehman attachmented out their proprietary hedge funds. Did they have whatsoever other option? What would have happened had they not through with(p) so?Investors and employers had a lot of skin in the game in the hedge fund market so they had a lot of pressure to bail out these funds. If they hadchosen not to bail them out then their reputations would have gone downhill lastly leading to their investors distrust of the firm. 7. Could Morgan Stanley and Goldman Sachs have survived without adequate bank holding companies? What were the benefits and disadvantages of becoming bank holding companies? What does cognomen as bank holding companies mean fo r the modality Morgan and Goldman operate going forward?By becoming bank holding companies the power was put into very few hands. Becoming a bank holding company increases diversity so that you do not only play in one market. This lessons risk but perhaps also decreases high returns that can be made if you focus on the investment banking business. Perhaps they could have survived if they had been able to come up with a balance of risk to take. Morgan and Goldman needed to exaggerate from solely investment banking and perform commercial banking trading operations as well.