Those of you who are familiar with the finance industry will have heard the term "bulge-bracket" banks. It originally referred to the position of the larger banks' logos on the cover of an offering circular or prospectus. The banks with the most senior roles - the ones that sold the largest number of securities - had their logos placed first. These logos were larger, and they bulged out. They were the bulge bracket.

 

The term, nowadays, refers to the big investment banks, the ones that make the most money and are the highest on the industry-ranking league tables.

 

Working for a bulge bracket used to mean you were working for the top tier, and probably getting paid top dollar.

Well, with most of the bulge-bracket banks having disappeared, I think we can now start to refer to them as the "burst-bracket" banks. These are the banks that pushed the envelope to the point where their balance sheets could no longer contain their own activities, and thus they burst. You know who  you are.

Until recently, the guys who worked at burst-bracket banks had a certain confidence. A friend of mine from a bank that recently collapsed under its own weight told me a few months ago that his employer would never go the way of Bear Stearns.

"Alan, we're not like them," he said, "they were out of their depth. We're one of the biggest and one of the best houses at managing this stuff. We've got the best derivative-valuation team in the business. Our management includes some real heavyweights. They know what they're doing. No way we're going anywhere."

I don't doubt that he believed what he was telling me. That's what being a burst-bracket banker used to be like. They really did believe their own press releases. That's why everyone was so surprised when it all crumbled.

It used to be that when I was asked, "What do you do for a living?", I could look forward to a respectful, or at least interested, reaction when I replied.

Nowadays, when I tell people I'm a banker, they might look at me with sympathy, I guess assuming I will soon discover my employer is the latest seemingly invulnerable institution to go bankrupt or cease to exist. Or they might look at me with disgust, as though I have something to do with the financial crisis that has pretty much clobbered everybody.

One thing bankers can rely on is no one is going to have any sympathy for them when they lose their jobs. And bankers are beginning to lose their jobs all over the place. During the savings and loan crisis of the '80s, more than 1,000 banks in the United States failed. The current subprime, liquidity, credit, idiotic-decision crisis has already claimed a handful of really big banks and financial institutions, and will no doubt swallow up many more.

And what's going to happen to all the bankers? Well, that is, unfortunately, quite obvious. Just as there is no need for bankers who specialise in writing collateralised debt obligations backed by residential mortgages any more, there is not much need for loan officers when banks have gone off lending; money-market traders are not very useful when there is no money market; and structured financiers are pointless when there is no finance to structure.

This would, ordinarily, be fairly depressing news, for bankers at least. But there is one last party coming up. Conveniently, the US government has recently approved the spending of US$700 billion to try to revive the credit markets.

I'm not sure anyone knows what effect this money is going to have, but at the very least, it should keep the system stumbling along for the next little while, and more important, it will provide badly needed cash to banks that are running a bit short. That means banks will, at least in the short term, be able to fund their cash obligations, such as end-of-year bonuses.

Now, the words "limits on executive compensation" have appeared in the press quite a lot in connection with the bailout. But the actual wording in the legislation is something vague about not compensating bankers for taking unnecessary and excessive risk.

This could mean many things and no one knows what it will actually mean in practice. But it is unlikely to end up preventing bankers who still have jobs from getting bonuses, even if their firms are the ones being bailed out.

So the brackets might have burst and we might all be jobless before long.

But if there's one thing that is going to make all those burst-bracket bankers feel a lot better, it's knowing that, thanks to the US taxpayer, there's going to be enough cash available to fund one last  bonus pool.