Goldman, Morgan to become bank holding companies, Fed says

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Investment bank bombshellGoldman, Morgan to become bank holding companies, Fed says


By Robert Schroeder
Last update: 9:59 p.m. EDT Sept. 21, 2008







WASHINGTON (MarketWatch) -- Giant Wall Street investment banks Goldman Sachs and Morgan Stanley are turning themselves into bank holding companies, the Federal Reserve said late Sunday night. The Fed approved the banks' applications, pending a required five-day waiting period. The move is the latest extraordinary action to hit Wall Street since the financial crisis began unfolding and follows the bankruptcy of Lehman Brothers

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Fed Allows Goldman, Morgan Stanley to Become Banks (Update1) By Craig Torres Sept. 21 (Bloomberg) -- The Federal Reserve Board approved the applications of Morgan Stanley and Goldman Sachs Group Inc. to become bank holding companies, the Fed said. ``The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies,'' the central bank said in an e-mailed press release in Washington. Fed officials also increased the two securities firms' ability to take out direct loans from the central bank, granting access against a wider pool of collateral. That step was made ``to provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure,'' the Fed said. The Fed Board also authorized the New York Fed to lend to the London-based broker-dealer subsidiaries of Morgan Stanley, Goldman Sachs, and Merrill Lynch & Co., the securities firm that agreed to a takeover by Bank of America Corp. earlier this month.