Fed Allows Goldman, Morgan to Become Full Banks

By Caroline Miller,  Newser Staff
Posted Sep 21, 2008 10:11 PM CDT
A sign for Morgan Stanley headquarters is seen Thursday, Sept. 18, 2008 in New York. \   (AP Photo/Mark Lennihan)
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(Newser) – Goldman Sachs and Morgan Stanley, the nation's last two major independent investment banks, have gotten permission to become bank holding companies, the Federal Reserve said tonight. A fundamental rearrangement of Wall Street, the move will allow them to create commercial banks, which would bolster their resources, while inviting increased regulation. It reflects the Fed's determination not to let Goldman and Morgan Stanley fail, the New York Times notes.

Following the bankruptcy of Lehman Bros. and the near-collapse of Bear Stearns and Merrill Lynch, the two investment banks have been the object of intense merger speculation. The move tonight buys them some breathing room, the Times says, and allows them to acquire banks that might fail in the next few months.