Goldman Sachs and Morgan Stanley gave up investment banking status

22 September 2008

Pending a statutory five-day anti-trust waiting period, the Federal Reserve approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies regulated by the central bank.

Pending a statutory five-day anti-trust waiting period, the Federal Reserve approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies regulated by the central bank.

 

In return it gives Goldman Sachs and Morgan Stanley greater access to central bank funds and makes it easier for them to buy retail banks.

 

The Fed states that it authorizes 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). It has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. 

 

In addition, the Board also authorizes 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.

 

Press release

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