Goldman, Morgan Stanley conclude there is no future in remaining investment banks

Goldman, Morgan Stanley conclude there is no future in remaining investment banks

www.bloomberg.com

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.

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And so the bleeding continues.



www.bloomberg.com
(visit the link for the full news article)

I am sorry, I am an idiot.

In laymans terms, what does this mean?

reply to post by lardo5150


From what I can understand it means that these instituitions have decided that investment banking is broken and that they are pulling back into more traditional banking.

I could be wrong though, I am a layman as well.

Basically the SEC has no oversight it is all done by the illegal FED. Basically the FED has full control literally of our financial system and its oversight. You know the same FED that had no clue this was all coming, you know the same fed that says there is no inflation, you know the same FED to this day the fundamentals are just fine, you know the same FED who does this every few years and uses these panics for a power grab.

Considering that investment banking has always been more profitable than traditional banking for two major companies to decide to pull out of it does not look good at all.

Just think what your social security fund would look like if it were privitazed in this economy.

eeep... double post. Sorry.

[edit on 24-9-2008 by grover]

i see that now that Goldman has shed the Investment Bank label
and had the Sunday petition approved to be reclassified as a commercial bank holding company
Ole Warren Buffett immediately jumped in to buy a $5billion state in Goldman...


I see where he's eventually going with this...the Berkshire stock/Buffett
see Goldman buying up smaller regional commercial banks to get a larger footprint in the banking & deposit accumulation sector.

And then, sometime in the near future ---when the coast is clear, Goldman will both spin-off the commercial banks portion of their business and reform another Investment Bank...
while also attaching a 'Goldman Investments Satellite' section to all the local commercial bank buildings ... much like the present day Bank of America main branches across the USA.

reply to post by St Udio


I am a former employee of Morgan Stanley. Even back 10 years ago, there was a drift towards repealing the Glass Stiegel act, both in terms of practice (JP Morgan Chase) and as a general desire of management. I think that both organizations (MS and GS) jumped onto this opportunity because it will in fact give them access to cheaper credit. I do not believe, therefor, that they going to spin off the commercial branch after they build it.