it’s like when justin left…
justin timberlake leaving ‘nsync to go out on his own. yankee stadium closing down for good.* mcdonald’s cutting out the trans fats. kfc moving the recipe. what i’m talking about folks is the end of an era.
today, as the turmoil continues in the financial sector, we learn about another end–the end of morgan stanley and goldman sachs as independent investment banks. late last night as the writing on the wall became glow in the dark, the firms voluntarily agreed to become bank holding companies like citigroup, bank of america, and wachovia.
what this means is they become subject to greater regulatory oversight that requires more disclosure, higher capital reserves, and less risk-taking but as bank holding companies, they now have a few luxuries like access to the fed’s discount window.
this move has significance because, as noted in the new york times, “just a year ago investment banks, the titans of global finance, considered bank regulation a millstone to be avoided at all costs. commercial banks have to subject themselves to restrictions on how much money they can borrow and what kinds of businesses they can be in. lobbyists for firms like Goldman spent years fending off closer supervision of their business. [now] as bank holding companies, the two banks, whose shares have lost about half their value this year, will have to reduce the amount of money they can borrow relative to their capital.”
i’m not so sure this is final though–as we know, the more things change, the more they stay the same. new kids on the block is on tour this summer and lance bass recently commented that he thinks the gang will be getting together again. time for justin to bring back those frosty locks.
* not all change is bad.
Similiar Stories:
Comments
No comments yet.
Leave a comment