SAN FRANCISCO (MarketWatch) -- The collapse of Lehman Brothers and the sale of Merrill Lynch have left questions about the future of the last two major, independent Wall Street brokerage firms, Goldman Sachs and Morgan Stanley, experts said Monday.

Goldman shares dropped 12% to close at $135.50, while shares of Morgan Stanley fell 14% to $32.19. The firms are expected to report quarterly results in coming days. See outlook.

Credit default swap spreads on Morgan Stanley MS, -2.35% rose 222 basis points to 498 in afternoon action, while spreads on Goldman GS, -1.14% widened by 146 points to 345, according to New York-based Credit Derivatives Research.

The CDR Counterparty Risk Index, which tracks credit-default swaps on leading banks and brokerage firms, jumped 98 basis points, or 45%, to 314. That's a record, CDR noted.

Lehman LEH, filed for Chapter 11 bankruptcy Monday after 158 years as an independent brokerage firm. See full story.

Merrill MER, +27.69% , one of the world's largest brokerage firms, agreed to be acquired by Bank of America BAC, -1.32% in a deal that was hurriedly put together over the weekend. See full story.

Those developments followed the March bailout of brokerage firm Bear Stearns, which was acquired by banking giant J.P. Morgan Chase JPM, -0.84% , with help from the Federal Reserve.

The three developments highlight the pressure on the brokerage industry. Unlike commercial and retail banks, which can rely on steadier sources of money from customer deposits, these firms have to borrow the money they need to do business in private markets. When customers and trading partners lose confidence, it can amount to a death knell.

Goldman and Morgan Stanley, the two largest U.S. brokerage firms, have weathered the credit crisis better than Lehman, Merrill and Bear.

However, some experts questioned the brokerage-business model Monday, arguing that firms may be better off as part of a larger commercial bank with access to deposits. See full story.

"We are now worried about the fate of the investment-banking industry as three of the top five independent investment banks either collapsed or were forced to be taken over," said Larry Tabb, chief executive of consulting firm TABB Group.

"Without doubt, the investment-banking industry will never be the same," he added in a note to clients. "The days of the all-in-one global investment bank may be nearing an end."

The events of the past weekend are highly significant because they will shift the securities industry closer to commercial banks, said Steve Thel, a business law professor at Fordham University and a former lawyer for the Securities and Exchange Commission.

Morgan Stanley may seek to sell itself to a bank because the Bank of America acquisition of Merrill has created a tougher competitive environment, David Hendler, an analyst at CreditSights, wrote in a note to investors.

"Goldman Sachs may be able to control its destiny more and seek to purchase its own bank if it needs to increase that funding base," Hendler added.

Matthew Albrecht, an analyst at Standard & Poor's Equity Research, cut his rating on Goldman shares to hold from buy Monday.

"Following a weekend that saw one peer acquired and another enter bankruptcy, we are more cautious on shares of Goldman," the analyst wrote in a note to clients. "We continue to believe it has performed better than peers through sound risk management and prudent executive decisions, but we also think the crisis of confidence within its industry has failed to separate good performers from bad.

"We expect continued uncertainty surrounding the company and the industry to weigh on the shares," he added.

Merrill Lynch spreads narrowed by 130 points to 325 after Merrill agreed to be acquired by Bank of America.