We are witnessing the decline and fall of the investment-banking profession as we have known it for the past 40 years.

The evidence is everywhere. The increasing regulations on Wall Street — as required by the Dodd-Frank law and still being written by the Federal Reserve, the Securities and Exchange Commission, the Commodities Futures Trading Commission and others agencies in the United States and Europe — will require the remaining companies to increase their capital, curb their risk-taking and reduce their principal investing.

Aside from the fact that investing principal and proprietary risk-taking per se had nothing to do with the recent financial crisis — and that the ability of Goldman Sachs Group Inc. to make a huge proprietary bet against the mortgage market probably helped saved the firm — these new rules will greatly curb Wall Street’s revenue and profitability at a time when the business itself is suffering a severe slowdown. (What sunk Wall Street in 2008 was the seemingly more conventional business of being a middleman for the manufacture, packaging and sale of increasingly risky mortgage-backed and other debt securities.)

Not being able to make those big proprietary bets when you see them developing — in effect, the closing of the casino that Wall Street has become over the past few decades — will severely limit bankers’ money-making opportunities. It will also protect the rest of us when those big bets go wrong or are perceived to be too risky. (For every Goldman Sachs acting brilliantly, there is an MF Global Holdings Ltd. acting foolishly).

There is little debate anymore that Wall Street had become highly dependent on its trading operations. Something like 90 percent of Bear Stearns’ profits in the years leading up to its March 2008 demise came from its trading and debt-origination activities. The percentages are not that much different at Goldman Sachs, where in 2010 its traditional investment-banking operations generated only $1.3 billion of $12.9 billion in pretax earnings, about 10 percent. All but $1 billion or so of the rest of Goldman’s pretax earnings came from its trading, lending and investing businesses.

The slowdown in business, combined with the looming trading curbs, has resulted in job losses across Wall Street. Morgan Stanley recently announced it was firing 1,600 employees. Goldman Sachs has done its usual turn of eliminating the bottom 10 percent of its workforce and a group of its long-serving partners. Bank of America Corp. announced that about 30,000 employees would be chopped by the end of 2012, although a number of the firm’s investment bankers lost their jobs in the past month.

Yet those suffering the most are the foreign firms that were trying to break into Wall Street’s business. Nomura Holdings Inc. has pretty much scuttled its most recent Wall Street experiment (it bought Lehman Brothers Holding Inc.’s European and Asian banking operations) and firms such as Societe Generale SA, UBS AG, Credit Suisse Group AG and Royal Bank of Scotland Group Plc are all cutting Wall Street bodies.

In November, Bloomberg News estimated that more than 200,000 people who work in finance had already lost or would lose their jobs this year.

Not only will the head-count reduction on Wall Street continue for the foreseeable future, but the vast sums overpaid to bankers and traders will inevitably continue to fall as well -- as many of them are finding out this bonus week. There is simply no easier and quicker way for Wall Street firms to keep up a modicum of profitability than by cutting pay for the people who still work there. Needless to say, the inevitable decline in Wall Street’s compensation will mean less tax revenue for New York City and New York State and fewer government services for the rest of us (absent higher taxes).