How did the credit crisis affect Investment Banking?

huge negative effect.

In no real order:
1.) M&A activity had been on fire. post-credit crisis, deal pipeline has all but dried up
2.) Debt underwriting activity went away
3.) Equity underwriting went away too with the general unease in the market (coming back though)
4.) Banks were stuck between a rock and a hard place on the M&A deals they had worked on. The deals required major financing commitments from the banks themselves. When credit became very risky and very costly, the banks had two choices 1.) back out of the deal and potentially ruin their relationships with their clients or 2.) take it on the chin and back these expensive offerings which would hurt their profitability well down the line
5.) Banks lost huge $ on their own proprietary trading activities
6.) Banks lost huge $ on their portfolios of mortgage securities

Now there are layoffs throughout the major banks. Not a good time to be a banker unless you are at Goldman.

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