Breaking News: Goldman Sachs and Morgan Stanley are now commercial banks!

[thewiseguy]

(CNBC) The Federal Reserve late Sunday approved a request from the country's last two major investment banks — Goldman Sachs and Morgan Stanley — to change their status to bank holding companies.

The change in status will allow them to create commercial banks that will be able to take deposits, bolstering the resources of both institutions. This means a future of stricter regulation, less leverage and probably lower returns.

But it also means a more stable financing future that will put the Federal Reserve and its balance sheet directly behind the two banks.

http://www.cnbc.com/id/26828495

So that is the end of an era for the last two major US investment banks.

[Liberal_in_LA]

1. wow.

[glowing]

2. So, these banks are about to fail as well? What does this really mean

AND why are these companies becoming even bigger.. Is B of A trying to make itself too big to fail with its latest buy out of Meryll Lynch? WTF did these "experts" think was going to happen?

[thewiseguy]

4. No. They were the last large investment banks left.

The feds have approved that they become commercial banks. That means a big line of credit will be available to both of these institutions so that they would not fail.

Yet at the same time both of these investment banks are now commercial banks. So that means tighter regulations and lower returns. Goldman Sachs is saying that they will become the 4th largest commercial bank in the country.

Just like JP Morgan, these banks will keep their investment branch.

[sandnsea]

6. They get access to depositors money

They just changed the rule to allow commercial banks to use depositors money to cover investment activities. We are at risk of losing everything and I mean everything. Maybe the Bushies really are getting ready to split to Paraguay.

[magellan]

3. Who'd trust these two to even think of touching their money?

Not I.

[Mind_your_head]

5. Where can I deposit my paycheck!!!!

:sarcasm:

[Palladin]

7. They now get to put their noses

in the Federal trough, snarfing up that "free" fiat money at the Federal Reserve "discount window".
The US Government is now in the business of backing all these banks, with free fiat money.
"The full faith and credit of the United States" hah hah. Money created from thin air.

[TahitiNut]

8. Where will they get the money to buy into the FDIC?

What accounts are covered and what accounts aren't covered? Interesting times.

[Selatius]

9. I'd rather do business at a credit union. At least at a credit union, I have voting rights.

In theory, I at least could keep the fucking train from jumping the rails and destroying everything in its way.

[galileoreloaded]

10. This is brilliant!!! In a sick f*&k kind of way. Seriously brilliant...

TRUST ME, they will beg, borrow, and steal the premium fees to get AUTOMATIC inclusion into FDIC for depositors. SOOOO.... the depositors are now covered to 100K/250K. The deal undoubtedly allows a grace, say 10 day to switch into a demand account. And then the new "banks" get to run to the window with the newly uncapitalized MBS/CDO's and dump it on the FED at 100% of the original note. Everybody made whole, except the taxpayer. This was incredible arbitrage. GS and MS just pulled a MONSTER. Sorry, but it's kind of like a train wreck or a pretty girl in a bikini, you may not want to look, but you have to.