Wall Street's latest major paradigm shift in the last week

Sorry if this may be a d_b


Radical Shift for Goldman and Morgan

By ANDREW ROSS SORKIN and VIKAS BAJAJ
The New York Times
Published: September 21, 2008

Goldman Sachs and Morgan Stanley, the last big independent investment banks on Wall Street, will transform themselves into bank holding companies subject to far greater regulation, the Federal Reserve said Sunday night, a move that fundamentally reshapes an era of high finance that defined the modern Gilded Age.

The firms requested the change themselves, even as Congress and the Bush administration rushed to pass a $700 billion rescue of financial firms. It was a blunt acknowledgment that their model of finance and investing had become too risky and that they needed the cushion of bank deposits that had kept big commercial banks like Bank of America and JPMorgan Chase relatively safe amid the recent turmoil.

It also is a turning point for the high-rolling culture of Wall Street, with its seven-figure bonuses and lavish perks for even midlevel executives. It effectively returns Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act.

By becoming bank holding companies, the firms are agreeing to significantly tighter regulations and much closer supervision by bank examiners from several government agencies rather than only the Securities and Exchange Commission. Now, the firms will look more like commercial banks, with more disclosure, higher capital reserves and less risk-taking.

For decades, firms like Morgan Stanley and Goldman Sachs thrived by taking bold bets with their own money, often using enormous amounts of debt to increase their profits, with little outside oversight.

Full story:

http://www.nytimes.com/2008/09/22/business/22bank.html?hp

 

Re: Wall Street's latest major paradigm shift in the week of last week

Do you mean "wake?"

 

The Fed delivers a great big F.U. to Phil Gramm.

 

In a related story, Goldman Sachs ordered 500,000 toasters today.

 

Dems fault, according to this:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

 

From the shirttail on that column ...

"He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election."

... so of course it's the Dems' fault. I would be shocked if he came up with any other answer there. I'm sure it's also their fault for socializing a large segment of our economy last week, too.

 

As I pointed out on the other thread, the American Enterprise Institute is a major architect of the Dubya administration's domestic policy.

 

http://www.sportsjournalists.com/forum/threads/60538/

 

Obama has no room to talk with Franklin Raines anywhere near his campaign...

Great moment on CNN tonight. A contributor (forgot his name), who is African American more or less said Obama and McCain are both full of shit, because instead of promising this and attacking that, they should be reminded they're United States Senators and can go back to Washington and do something about this RIGHT F-ING NOW.

Or, that could be the problem ... that they've both been in Washington.

 

Franklin Raines isn't anywhere near the Obama campaign.

Take it to the Politics forum.

 

Guys, what's with the Fresca?

 

He's Obama's main economic advisor. Read a paper.