As US Firms Stumble, Japanese Banks Step Up

Era of investment banks ends

(NEWSER) - When Goldman Sachs and Morgan Stanley ditched the investment banking model, it didn’t just mark the end of an era, it marked the end of Wall Street as we know it, the Wall Street Journal declares in an editorial today. And with investment banks gone, the US financial system will become sturdier, but a lot less innovative. More»

(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. More»

Banks, like homeowners, refused to believe how bad things really are

(NEWSER) - The collapse of Lehman Brothers and the fire sale of Merrill Lynch are stunning developments, Joe Nocera writes in the New York Times, as is the fact Goldman Sachs and Morgan Stanley are the only big investment banks standing. But the turmoil isn’t simply the result of complex trading instruments gone awry, Nocera writes; “what’s going on is something we are all familiar with: denial.” More»

Paulson brokers twin public-private liquidity measures

(NEWSER) - Ten of the world's largest banks have formed a massive liquidity fund to mitigate the effects of the Lehman Brothers meltdown, reports the Financial Times. All the investment banks will be able to borrow up to a third of the $70 billion fund in order to reduce volatility and stay in business while Lehman is being wound down. They will also be able to borrow from the Fed under newly relaxed terms. More»

James Stewart on the week that Lehman failed, and meltdown loomed

(NEWSER) - James Stewart’s reconstruction of the 8 nail-biting days, a year ago, in which the federal government stepped in to stop the collapse of the world financial system—published in the New Yorker this week, just as Fed chief Ben Bernanke was declaring the recession officially over—makes riveting, tense reading. “I don’t think I can take another day of this,” one banker says getting out of the Goldman Sachs car on Day 4. “You’re getting out of a Mercedes to go to the New York Federal Reserve,” snaps Bernanke. “You’re not getting out of a Higgins Boat on Omaha Beach.” Not quite, at least. More»