The end of the Wall Street investment bank

Source: Exec Digital USA

Date :9/22/2008 4:59:06 AM

As Goldman Sachs and Morgan Stanley move to become traditional banks, Wall Street marks the end of an era.

Wall Street changed forever yesterday, September 21, as Goldman Sachs and Morgan Stanley received regulatory approval to transform themselves into traditional bank holding companies.

While it appears to be a “technicality,” it means that both banks now have equal and permanent rights to access emergency funds from the US central bank, the Federal Reserve.

But they will be under much tighter regulation from now on.

Investment banks have so far been the biggest causality of the credit crisis, which has shown that the business model of the investment bank – which conducts most of its business with other banks – no longer works.

Bear Stearns and Lehman Brothers have already collapsed, while the other Wall Street investment bank – Merrill Lynch – was acquired by Bank of America.