Last Two Major Investment Banks Get Change OK
WASHINGTON — The Federal Reserve has stepped in again to help Wall Street.
The Fed’s board has voted unanimously to give the last two major investment banks a status change that will let them get into the commercial banking business. Goldman Sachs and Morgan Stanley will become bank holding companies.
There were concerns about their ability to survive following last week’s collapse of Lehman Brothers and the forced sale of Merrill Lynch.
Goldman and Morgan Stanley will be able to set up banking subsidiaries to take deposits and also get access to the Fed’s emergency loan program. They’ll also be able to get short-term loans from the New York Federal Reserve Bank during a transition.
The change also means the two investment houses will fall under the direct regulation of the Fed, not the Securities and Exchange Commission.