End of an era on Wall Street

The two surviving major investment banks in the US are changing their status to become bank holding companies, allowing them to take deposits from investors.   ┬á The status change should enable Morgan Stanley and Goldman Sachs to raise money by opening commercial banks. ┬á┬á The move, which is part of a major restructuring effort on Wall Street, also gives the two financial institutions access to Federal Reserve support and puts both firms under the FedÔÇÖs regulation.┬á┬á The Federal Reserve Board's unanimous approval of the change ends the reign of the huge securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of tumult that saw Lehman Brothers Holdings Inc. file for bankruptcy protection and led to the sale of Merrill Lynch & Co. to Bank of America Corp. ┬á┬á With all the recent turbulence in financial markets, there were fears that Morgan Stanley and Goldman Sachs could not survive as independent players, and both their share prices have suffered.┬á┬á The announcement paves the way for the two New YorkÔÇôbased firms to build their deposit bases, possibly through acquisitions. That will enable them to rely more on deposits from retail customers rather than using funds borrowed in the bond market ÔÇô the tactic that led to the fall of Lehman Brothers and Bear Stearns, which was acquired by JP Morgan Chase earlier this year. ┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á