Goldman Sachs and Morgan Stanley to be holding companies; get more printed money: Fed

L to R : Suresh de Mel, Nisthar Cassim, Randhula De Silva, Fayaz Hudah, Chandula Abeywickrema, Dr Nirmal De Silva, Anushka Wijesinha, Talal Rafi

WASHINGTON, September 22, 2008 (AFP) – US investment banks Goldman Sachs and Morgan Stanley will become bank holding companies and will receive new US government credit, the Federal Reserve announced late Sunday. Goldman Sachs and Morgan Stanley are the only independent investment banks remaining in the United States following a meltdown on Wall Street that saw the collapse of investment bank Lehman Brothers last Monday and the government bailout of insurance giant AIG.

In a statement, the Federal Reserve said its board had approved “the applications of Goldman Sachs and Morgan Stanley to become bank holding companies” and authorized the Federal Reserve Bank of New York “to extend credit” to the two firms.

The Fed also made these collateral arrangements available to the broker-dealer subsidiary of investment firm Merrill Lynch.