Morgan and Goldman will now be subject to much stricter capital requirements and regulatory oversight. Although the transition into a bank holding company will reduce their chances of making outsize returns on equity in the future, it allows them to remain independent.
Morgan Stanley has apparently abandoned merger talks with Wachovia as it found Mitsubishi a willing investor in the firm. Mitsubishi UFJ will pay $8.4 billion for a 20% stake in Morgan Stanley.
This leaves Wachovia out in the cold. The bank still has problem assets it needs to unload, and is searching for more capital. Mr. Paulson better speed that plan through.
Too bad that investor's who understand how bad this is for Wachovia can't short the stock...
Reported by Mock The Market http://mockthemarket.blogspot.com/
