In the space of a week, the four remaining large independent investment banks have disappeared. Lehman Brothers collapsed, Bank of America is taking over Merrill Lynch and Morgan Stanley and Goldman Sachs are turning themselves into regulated banks. In return for tighter regulation, the two last can look forward to stable funding. But the demise of stand-alone investment banks does not purge the system of risk – it merely shifts it.

Morgan Stanley and Goldman Sachs were under pressure from investors and regulators alike to change their business models. Forcible deleveraging would have come anyway. Their metamorphosis beat the authorities to it.