New Wall Street Powerhouses Emerge

ABC News’s Bianna Golodryga reports: With Bear, Lehman and an independent Merrill out of the picture, Morgan Stanley and Goldman Sachs remain the last brokers standing.

Shocking at how quickly this all happened. But not shocking that it actually happened. Over the last decade, brokers have been acting like banks -- and thus became take over targets for larger banks. Bank of America expressed an interest in Merrill this time last year (when Merrill was at $90 a share). I spoke with Bank of America CEO Ken Lewis six or so years ago when he first took over at the bank. Even then, he was stressing a more compact financial services sector.

No doubt this is a big blow to New York and New Jersey economies due to widespread layoffs. But going forward, the banking industry -- while consolidated and much smaller, will most likely be more powerful.

I can't help but notice the similarities to the dot com bubble. There were tens if not hundreds of Internet companies before the bubble burst, leaving only a handful. But the three to five left have a larger market capitalization now than all of the dot com companies at the height of the bubble.

Ken Lewis and Jamie Dimon, of JP Morgan, once viewed as Wall Street’s biggest outsiders, are now the new kings of the street.

The AIG story is much bigger and potentially damaging. This is one that should be watched closely. It will be more difficult for an outside buyer to step in and save the world's largest insurer. And so, while the Government and Fed wouldn't help Lehman out, don't be surprised if they do step in somehow for AIG.

To think: on any other day the big story would be oil which is down dramatically below $100. Inflation is down as well. At least there is some good news for consumers.

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