One source who stopped by the Lehman Brothers building in Midtown Manhattan this morning described the scene down there as a "zoo". "I couldn't resist going down to have a look," he says. Every cable channel is pitched up outside and inteviewing anyone they can. Former Lehman employees are still coming out of the building carrying boxes, having been told to come in and clear out their desks.

And the markets are equally frantic. The Dow Jones industrial average was down 270 points at midday following similar turbulance in Europe.

The dramatic demise of two of Wall Street's sturdiest firms has got analysts wondering what is next. What will happen to the capital markets industry as we know it?

Analyst firm TowerGroup is predicting a dramatic decline in the use of derivatives and structured products - after all, there are now two fewer firms to facilitate these transactions than there were last week and the difficulty firms have had unwinding these positions when things went belly up is enough to put anyone off their dinner.

But more importantly, the structure of financial services firms is set to change, TowerGroup analysts believe, as banks assume control of capital markets firms. Reports this morning also suggested that the age of the independent broker dealer is over and such entities can only survive as arms of broader financial services firms, such as Bank of America or Citi.

Especially relevant for our industry, TowerGroup predicts a dramatic drop in technology spending across the capital markets industry – with several top spenders either exiting the business or reducing their overall commitment to IT investment.