And then there were two.

In just six short months (or long ones, depending on where you sit), the number of major investment banks on Wall Street has shrunk from five to two. Bear Stearns fell in March. And now, with Lehman Brothers in bankruptcy and Merrill Lynch in the arms of Bank of America, just Morgan Stanley and Goldman Sachs are left standing.

Regulators have long wondered whether the market is better off with investment banks as independent firms or as divisions of larger commercial banks. That question will undoubtedly continue to be asked as a new administration is ushered into the White House in the coming months.

Regardless of what Washington may ultimately decide, the market has made its choice clear this year: The independent investment-banking model is dead.

"Without doubt, the investment-banking industry will never be the same," Larry Tabb, founder of the advisory firm Tabb Group wrote in a report today. "The days of the all-in-one global investment bank may be nearing an end. We are seeing a downsizing of industry capacity, and we will absolutely see a movement away from risk toward transparency and liquidity."

This is not to say that the Bank of America-Merrill Lynch model will fare much better, but at least it will have size on its side during times of crisis like this one. After all, Citigroup, which became a banking colossus with the merger of Citicorp and Travelers in 1998, hasn't exactly been an idyllic example of operational efficiency. But, painful as its voyage may have been in recent years, there is no evidence that Citigroup will succumb to this credit crisis the way investment banks have.

What will this mean for Morgan Stanley and Goldman Sachs? They, too, have had to deal with tarnished mortgage investments and bloated balance sheets during this credit crisis. Morgan Stanley's stock has fallen by more than half in the past year, and Goldman's has dropped by 44 percent. Neither bank is finished delivering bad news to investors, but they will try mightily to cloak that bad news with a positive spin that they are still doing better than the others.

Both banks are carefully constructing their comments now, as Morgan and Goldman are set to release third-quarter results later this week.

"Goldman and Morgan are better capitalized and better managed than the other three," says Steve Thel, a business law professor at Fordham Law School. "This is not to say they can survive, but the market is indicating that for highly leveraged firms, a steady source of capital is important."

Even if the two remaining names emerge from this credit crisis as independent entities, it's safe to assume that they will be forced to change the way they approach risk, just as the carcasses of their competitors will be forced to do under their new ownership.

This will pose a problem for Goldman and Morgan. As public companies, they are under pressure by shareholders to grow profits, which is the very pressure that led these firms to take the gamble on mortgage securities that has so spectacularly failed.

Perhaps, then, it's time to reconsider the investment bank as a public company. When Goldman became the last of the white-shoe firms to launch a ticker in 1999, the public structure for Wall Street became the new norm. It gave banks a source of capital, but it also gave them the freedom to take on risk with other people's money rather than their own.

Goldman and Morgan may also find it challenging to compete with the commercial banks on their own turf. The more capital a firm has available, the theory goes, the more risk it can take on.

Whatever the case, the investment-banking industry's shareholders, executives, and well-compensated employees must adapt to a new way of life. And the future may not please all or even most of them.