The end of an era.
WSJ reports: Goldman Sachs, Morgan Stanley To Be Bank Holding Companies...The Federal Reserve said it had approved the transformation of both Morgan Stanley and Goldman Sachs from investment banks to traditional bank holding companies, a step that would place the last two Wall Street titans under the close supervision of national bank regulators, subjecting them to new capital requirements and additional oversight.
no more I-banks...
Bring it on.
i wonder if goldman will establish a commercial bank..
heh, yo johnny smith lets go open up a CD at Goldman Savings and Loan.
"In its statement, Goldman said that it will now become the nation’s fourth-largest bank holding company, with its small existing deposit-taking units to be rolled into GS Bank USA. Morgan Stanley will convert its Utah industrial bank into a deposit-taking national bank, to be called Morgan Stanley Bank."
so this is the goverment's "regulations"? I dont this that this is that big of a deal- it seems that GS and MS are losing a name and getting more regulations b/c the govt is too lazt to write up new llaws concerning just i-banks so it is sweeping them into another category.
So what do you do? -I work for an investment banking firm. Oh okay; you are like my brother, he works for Edward Jones. -No, a college degree is required in my profession
So what do you do? -I work for an bank holding company. Oh okay; you are like my brother, he works for Edward Jones. -No, a college degree is required in my profession
You crack me up dude...I always laughed a little when I saw your quote in your posts. I relate to this quite a bit since ppl in my town think that I will work at my local bank branch after getting a "finance" degree.
And soon we all may.
...this was done so GS and MS would have direct access to the discount window. Prior they could borrow thru the PDCF but the discount window accepts broader collateral and for a greater term. Neither is about to set up a retail bank...that would require setting up branches, hiring thousands of people, etc. Not something you decide on overnight. The increased regulation is a negative...only time will tell what it costs them in terms of freedom to operate. Depends what the fed has up its sleeve. My guess is that this was forced on them as part of the deal...once the fed/treasury saves ur a$$ like they did for these guys last week they own you.
Bondarb has a great point. The fed and treasury pretty much saved their ass. Regarding the increased regulatory measures, I think it may hurt them in the short run (next 1-2 years). However, in the long run (5+ years) they may switch back to being classified as "investment banks." or perhaps define a new classification under more stable economic conditions which allows them to enjoy the benefits of both and incorporating the best of both worlds.
Henry Paulson really saved their fucking asses. I wouldn't be surprised if there's a nice fat check waiting for him in a Swiss bank.
Wow just Wow, What can happen next?
Bloomberg has some quotes saying this will be the end of big bonuses. I assume they are talking about the heads of the banks...doesn't Citi and BoA pay good money despite being holding companies? I can't see how the pay scale would just disappear because they realign the business model. Sure there are stricter rules on leverage, but does that mean bonuses completely disappear?
here's the link:
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