Goldman, Morgan to Become Bank Holding Companies

QUESTINY · 09-22-2008, 02:44 AM

Goldman, Morgan to Become Bank Holding Companies

In one of the biggest changes to Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night.

The move fundamentally changes one of the mainstays of modern Wall Street. It heralds new regulations and supervisions of previously lightly regulated investment banks.

The move comes after the bankruptcy of Lehman Brothers and the near-collapses of Bear Stearns and Merrill Lynch.

Being a bank holding company would give Morgan and Goldman access to the discount window of the Federal Reserve. While they have had access to Fed lending facilities in recent months, regulators had planned to take away discount window access in January.

The regulation by the Federal Reserve brings a host of accounting rule changes that should benefit the two banks in the current environment.

In return, they will submit themselves to greater regulation, including limits on the amount of leverage they can take on.

http://dealbook.blogs.nytimes.com/20...ing-companies/

09-22-2008, 02:44 AM	#1
QUESTINY Avalon Senior Member Join Date: Sep 2008 Location: Nebraska Posts: 407	Goldman, Morgan to Become Bank Holding Companies Goldman, Morgan to Become Bank Holding Companies In one of the biggest changes to Wall Street in decades, Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night. The move fundamentally changes one of the mainstays of modern Wall Street. It heralds new regulations and supervisions of previously lightly regulated investment banks. The move comes after the bankruptcy of Lehman Brothers and the near-collapses of Bear Stearns and Merrill Lynch. Being a bank holding company would give Morgan and Goldman access to the discount window of the Federal Reserve. While they have had access to Fed lending facilities in recent months, regulators had planned to take away discount window access in January. The regulation by the Federal Reserve brings a host of accounting rule changes that should benefit the two banks in the current environment. In return, they will submit themselves to greater regulation, including limits on the amount of leverage they can take on. http://dealbook.blogs.nytimes.com/20...ing-companies/