Mid-Market Firms May Be Better Positioned

Mid-Market Investment Banks that took fewer risky positions than their bulge bracket colleagues may be better able to ride out this storm, according to an investment banker at a Chicago area firm. The firms that survive the current crisis will be the well-diversified “universal banks” that have broader portfolios. They have been a bit more conservative that others in the past but aim to be around after the bad times to serve clients. Nevertheless, our source predicts that 2009 will be a lean year for hiring in investment banking careers.

Meanwhile, Goldman Sachs posted a 70% drop in fiscal third-quarter net income on declining client activity and asset valuations as return on equity fell, according to the Wall Street Journal.  Amid the “solid” results, Chief Executive Lloyd C. Blankfein said his firm is “well-positioned” to meet clients’ needs and “act on the right market opportunities.” Shares of Goldman fell 7.3% to $125.75 in recent premarket trading.

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