The Remaking of Wall Street

60 Pages Posted: 19 Jul 2017 Last revised: 30 Nov 2022

See all articles by Andrew F. Tuch

Andrew F. Tuch

Washington University in St Louis - School of Law; European Corporate Governance Institute (ECGI)

Date Written: July 12, 2017


This Article critically examines the transformation of the financial services industry during and since the Financial Crisis of 2007–2009. This transformation has been marked by the demise of the major investment banks and the related rise of a set of powerful players known as private equity firms or alternative asset managers – pools of assets structured as private funds. First, this Article argues that private equity firms now mirror investment banks in their mix of activities; ethos of entrepreneurialism, innovation, and risk-taking; role as “shadow banks”; and overall power and influence.

These similarities might suggest that private equity firms pose financial risks similar to those caused by their now-defunct predecessors. But this Article suggests that private equity firms, as currently structured, are more financially stable and pose less systemic risk to the global economy. These firms are structured and funded in ways that may address the basic shortcoming that led to investment banks’ downfall – specifically, the use of short-term debt to fund longer-duration assets. It thus argues that, in the face of onerous post-Crisis reforms, Wall Street has evolved to displace investment banks with more financially resilient institutions. Importantly, however, the Article cautions that ongoing changes in private equity firms’ broker-dealer activities raise systemic concerns that require active regulatory monitoring. The Article also identifies systemic and financial stability concerns arising from the funds that these firms manage, particularly their hedge and credit funds, about which little detailed information is publicly available.

Finally, the Article explores other implications of these developments, including for the effectiveness of post-Crisis regulation, the popular backlash against Wall Street, the incidence of misconduct, and the evolution of financial institutions.

Keywords: Private Equity, Private Funds, Private Capital, Investment Banking, Systemic Risk, Financial Crisis, Financial Stability, Asset Management

JEL Classification: G01, G21, G23, G24, G33, K10, K20, K22, L22, N20, N22

Suggested Citation

Tuch, Andrew F., The Remaking of Wall Street (July 12, 2017). 7 Harvard Business Law Review 315 (2017), Washington University in St. Louis Legal Studies Research Paper No. 17-07-01, Available at SSRN: or

Andrew F. Tuch (Contact Author)

Washington University in St Louis - School of Law ( email )

One Brookings Drive
Saint Louis, MO 63130
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

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