And they're able to do it with impunity because they know governments will bail them out if they crash again. We should've nationalised the bastards when we had the chance. Never mind... a job for the next Labour government (hopefully 2015-ish).
A nice summary in the Guardian of how investment banking operations make money. Note that very little of it relates to activities which actually increase output in the real economy of goods and services - it's really about redistributing resources from one economic agent to another rather than creating new resources.