Here is what the Federal Reserve said about Morgan Stanley and Goldman Sachs on becoming a bank holding company.
"To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve's primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF); the Federal Reserve has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. In addition, the Board also authorized the Federal Reserve Bank of New York to extend credit to the London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be eligible to be pledged at the PDCF."
"Perhaps speculation of either or both making a move for a bank is not so crazy after all? In the case of Morgan, it has all been assumed but Goldman has been at least publicly denying it," writes Todd Sullivan at http://valueplays.blogspot.com.
Now both banks have already announced that they will become a bank holding company.
"Morgan Stanley today announced that its application to become a bank holding company was approved by the US Federal Reserve" reports Marketwatch. "The Goldman Sachs Group, Inc. (NYSE: GS) today announced that it will become the fourth largest Bank Holding Company and will be regulated by the Federal Reserve," reports Welt Online.
