investment banking

In the mid-20th century, large investment banks were dominated by the dealmakers. Advising clients on mergers and acquisitions and public offerings was the main focus of ma or !all "treet partnerships. #hese $bulge bracket% firms included &oldman "achs, 'organ "tanley, (ehman )rothers, *irst )oston and others. #hat trend began to change in the +,-0s as a new focus on trading propelled firms such as "alomon )rothers, 'errill (ynch and .re/el )urnham (ambert into the limelight. Investment banks earned an increasing amount of their profits from proprietary trading. Advances in computing technology also enabled banks to use more sophisticated model driven software to e/ecute trades and generate a profit on small changes in market conditions. In the +,-0s, financier 'ichael 'ilken populari0ed the use of high yield debt 1also known as unk bonds2 in corporate finance and mergers and acquisitions. #his fueled a boom in leverage buyouts and hostile takeovers 1see 3istory of 4rivate 5quity2. *ilmmaker 6liver "tone immortali0ed the spirit of the times with his movie, !all "treet, in which 'ichael .ouglas played the role of corporate raider &ordon &ekko and epitomi0ed corporate greed. Investment banks profited handsomely during the boom years of the +,,0s and into the tech boom and bubble. !hen the tech bubble burst, it precipitated a string of new legislation to prevent conflicts of interest within investment banks. Investment banking research analysts had been actively promoting stocks to investors while privately acknowledging they were not attractive investments. In other instances, analysts gave favorable stock ratings to corporate clients in the hopes of attracting them as investment banking clients and handling potentially lucrative initial public offerings. #hese scandals paled by comparison to the financial crisis that has enveloped the banking industry since 2007. #he speculative bubble in housing prices along with an overreliance on sub-prime mortgage lending trigged a cascade of crises. #wo ma or investment banks, )ear "tearns and (ehman )rothers, collapsed under the weight of failed mortgagebacked securities. In 'arch, 200-, the *ederal government began using a variety of ta/payer-funded bailout measures to prop up other firms. #he *ederal 8eserve offered a 9:0 billion line of credit to ;.4. 'organ