The last two major investment banks (Goldman Sachs and Morgan Stanley) in the US have changed their status to become bank holding companies, allowing them to take deposits from investors. The changes should enable Goldman Sachs and Morgan Stanley to raise more funds by opening commercial banks.
The move – part of a huge restructuring effort on Wall Street – will also give them access to Federal Reserve support. The US government has announced a $700bn (£382bn) package to tackle the worst financial crisis for decades.
Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night, a move that will fundamentally alter the landscape of Wall Street.
Transforming these investment giants into licensed, deposit-taking banks marked the end of an era for Wall Street. It heralds new regulations and supervision of previously lightly regulated investment banks, as well as an end to the outsize paychecks that helped shape the image of the chest-thumping Wall Street banker.
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