As Wall Street investment banks try to assess the chances of a $700 billion government bailout, local investment banks like Morgan Keegan are waiting for the market to finally stabilize.

Gage Logan III, managing director for the Nashville branch of the Memphis-based investment firm, says emotions are running high among investors, and employees are spending a lot of time answering clients’ questions about their money.

“We are like a lot of the other financial institutions. We would like to see some stability, and with that stability everybody will become more confident,” Logan says.

With about 170 employees in the local market, the company had projected revenue of $23 million in 2008, up about $1 million from last year.

But the volatility in the market could make that difficult.

“A lot of people are trying to hold their own in a difficult business market,” Logan says. “We would like to see growth, but we don’t know what the market will do and we can’t say that will happen.”

Morgan Keegan & Co., a subsidiary of Regions Financial Corp. (NYSE: RF), first opened in the Nashville market in 1982.

The regional investment banking firm offers securities brokerage, trust and asset management. It has more than 400 offices and 4,500 employees in 19 states.

Logan says the company is relying on the experience of its employees to not only weather the storm but to grow despite the challenges.

More than 200 jobs have been cut in the financial services sector in Tennessee since the beginning of the year, according to state officials.

Logan says he’s been able to hire good employees, such as a person who moved to Nashville after working at a New York investment firm.

He describes his greatest frustration as the fact that his company cannot control the market.

“Everybody gets off the elevator in the morning trying to make money for our clients, and we all get terribly frustrated when we can’t,” Logan says.

Morgan Keegan, like some of the larger investment firms, has been criticized by some investors who say the company’s mismanagement of funds resulted in financial losses.

Logan described the business as being similar to a community bank.

Decisions at each Morgan Keegan branch are made locally, he says, adding that it is not the case with many Wall Street competitors.

Bill Ingram, chairman of the economics department at Lipscomb University, says the downfall of the large investment banks could mean more investors will look to local firms.

“There could be more business at the local level,” Ingram says. “There is going to be tremendous change in the financial market.”

Logan says he can’t speculate on the future for his industry this year, but says the most important thing investors can do is not become emotional.

“Investors need to make well-informed decisions as opposed to emotional decisions,” he says.

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