Investment banking has been around for decades but since the major economic slump of 2008, investment banking in the United States has shifted a bit to ensure nothing like that happens again. Before the great depression investment banking had hit a golden era, and big name bank like JP Morgan and National City Bank, who are still in business today, where thriving on the prolonged bull market. Though nobody can pin point everything one hundred percent accurately when it comes to economics and market shifts, investment banks continue to help the American economy by acting as the middleman between companies and buyers in the public.
After 1929 the banking industry was in a terrible slump, nearly 40% of banks had to close their doors or where forced to merge with other banks. IN 1933 the government passed the Glass-Steagall Act which put up a wall between commercial banking and investment banking, hoping it would stabilize the banking industry. Eventually, in 1999 the Act fell apart as predicted in the early 70s, but investment banks had already begun to revamp their shady image in the 1980s and provide a flair and trustworthy service that is still intact today.
As stated before, one job of an investment bank is to become a middleman for a company that wishes to issue a new stock or bond and retire the old one before selling the new one to the public. The company would then hire an investment bank to weigh the value and risks to help the company choose a price, underwrite and then sell to the buying public. Investment banks are often hired during mergers and acquisitions where they give they offer services to their clients such as business evaluation, negotiation, structure of transactions, pricing, and procedures and implementation. More often than not, investment banks are the ones who pitch options and ideas to their clients but there are the occasional business that approach investment banks with their own ideas.
Trading securities is another huge line of work for investment banking. Large institutional investors like university endowments, mutual funds, pension funds and hedge funds go through investment banks to trade securities. The bank takes up the job of matching buyers to sellers and sometimes buy and sell securities out of their own account. When the Glass-Steagall Act fell in 1999 investment banks started to offer up retail brokerage along with commercial lending.
When your looking for a good investment bank, Highland Capital Management in Dallas, Texas is one of the best. Co-founded by James Dondero on jimdondero.com the bank operates under Dondero who has over 30 years of experience with credit and equity markets with a sharp focus on investing. Dondero graduated with the highest honors from the University of Virginia with dual majors in Accounting and Finance. Between 1985 and 1989 James Dondero was a Corporate Bond Analysis at American Express, then became a Chief Investment Officer until 1993. Dondero has been wildly successful in the finance world and carries that success over to HCM.