Sep 22, 2008
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Morgan Stanley and Goldman Sachs are Now Banks
Wall Street really has evaporated and the commercial bank has won as the dominant business model.
While I wrote about it a few days ago, who knew it would’ve come so fast -with the government actually converting the last two remaining Wall Street investment banks into commercial banks.
This is great news for the American Economy. On the one hand, it wipes out the extreme profits large investment banks have had to aim for since the deregulation of brokerage commissions in 1975. On the other hand, it cuts off avenues for extreme risk taking in secondary markets.
This should translate into more funds being available for lending in the primary markets -directly to businesses -based on the strength of a business, rather than being based on the hope of being able to flip that obligation to a greater fool in the secondary market.
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