Wall Street: The Big Chill

Richard S. Fuld Jr. is not sure how long the recession will last. But the chairman and chief executive of Lehman Brothers Inc. (LEH ) does know that he will have to move most of the staff who used to work at the firm's former headquarters next to Ground Zero into a new 32-story skyscraper in midtown Manhattan he will buy from rival Morgan Stanley Dean Witter & Co. (MWD ) for about $700 million. And he's certain how much worse business on Wall Street has gotten since September 11. "We were already headed into a recession," Fuld says. "Now mergers are way down, initial public offerings are way down, and financing markets are down."

Wall Street will never be the same. In time, the devastation in New York's financial district will be repaired. But by then, many firms will likely have dispersed--uptown, out of Manhattan to other boroughs, or to neighboring states. What's more, the way Wall Street works will change. Gone will be the gilded age of excess fired by a global infatuation with the stock market. A humbled financial-services industry will have to scrape by on a sparser diet of lower-margin business and far fewer deals. At the same time, it must strive to rebuild its credibility, shattered by overinflated deals, rosy-spectacled stock recommendations, and charges of conflicts of interest.