Goldman, Morgan Stanley Bring Down Curtain on Wall Street Era

[Nambe]

Source: Bloomberg

Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.

The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.

``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.'' ...

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aoHW3zyqTeAA&refer=home

[pfitz59]

1. CEO bonuses?

Too bad the theivery can't continue!

[radfringe]

2. as another DUer put it

they get the get the golden parachutes, we get the golden showers

[Hannah Bell]

3. so is it looking like morgan & goldmans will buy up a lot of cheapened

financial assets & come out stronger than before?

shades of morgan in 1907?

[Dover]

5. looks that way.

The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.

..snip..

Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''

Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.

``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''

Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said.

[dixiegrrrrl]

7. oh goodie whompers.

They are a bank.
A nice solid respectable bank.
Why,of course we should rush to deposit our money there.
After all, bank fraud is sooooo...yesterday.

[Kablooie]

4. They will just take their 700 billion dollars we give them and retire I guess.

[Supersedeas]

6. ray-gon-nomics glory days....they'll pass ya by....glory days