Investors are breathing a sigh of relief that 2008 is over, but they shouldn’t get too comfortable. After all, with a worldwide recession under way, investors can expect acceleration in corporate bankruptcies in 2009.

But the question is - which ones?

In the financial services sector, 2008 was a year of spectacular failures:

• Bear Stearns Cos. and Merrill Lynch & Co. Inc. were absorbed by JP Morgan Chase & Co. (JPM) and Bank of America (BAC), respectively.
• Lehman Brothers Holdings Inc. (OTC: LEHMQ) filed for bankruptcy protection.
• And financial-sector giants American International Group Inc. (AIG) and Citigroup Inc.  were both bailed out a vast expense to taxpayers.

If at the start of 2008 I’d written that the entire New York investment banking business would disappear during the year, you’d have thought me a madman. But it has. The two houses still standing, Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), are both now officially conventional banks, with lower leverage ratios and a changing business mix.

In the New Year, we’ll see less turbulence in financial services than in 2008, if only because it would be almost impossible for it to have more. The dangerous process of de-leveraging becomes less dangerous as leverage itself is reduced, and the capital injections from the Troubled Asset Relief Program (TARP) into the major U.S. banks have hastened their recovery. Solid banks such as Wells Fargo & Co. (WFC), and PNC Financial Services (PNC) are likely to do quite well, gaining market share at the expense of their weaker brethren.

Indeed, Wells and PNC each completed major buyout deals right as 2008 came to a close.

This year, however, will be the one in which banks that have truly done a poor job will be separated out from those who merely made the obvious mistakes of the boom and just need time and some extra capital to work through their problems.

Citigroup, for example, was at the beginning of 2008 a pretty obvious example of financial-sector “roadkill.” A messy conglomerate of banking, investment banking and insurance that had been put together but never properly integrated, Citi had been at the forefront of every major financial disaster in the last 30 years and was not about to miss this one. The fact is that only weeks after receiving a $25 billion capital injection from the TARP, Citi was back in trouble again, this time requiring not only more capital, but a $300 billion guarantee of its liabilities. That’s a pretty good indicator that in a free market, Citi would have slid into corporate bankruptcy and liquidation.

Obviously, if the government chooses to keep Citi afloat, U.S.