Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Goldman, Morgan Want Your Money

By

Former investment banks seek depositors' funds.

PrintPRINT
Armed with stronger backing from federal banking regulators, Goldman Sachs (GS) and Morgan Stanley (MS) are going shopping for cash.

Yesterday, the last bastions of Wall Street independence announced plans to transform into more traditional banks, subjecting themselves to deeper regulatory scrutiny and tighter limits on leverage. The move also allowed them to pursue customer deposits, a more stable funding source than the recently chaotic money markets.

This morning, Bloomberg reported the 2 firms are already on the prowl, combing the banking landscape for deposits they can snatch up on the cheap. This may seem odd, since Goldman and Morgan were fighting for their lives just a few short days ago - and Morgan was desperately searching for an infusion of capital.
Minyanville's Why Wall Street Will Never Be the Same
Potential investors may be comforted by new borrowing limits for the formerly leverage-dependent institutions. In addition, financing operations with customer deposits rather than through money markets will decrease the risk of a liquidity squeeze.

Rather than targeting entire banking institutions, Goldman is more interested in buying deposits on the wholesale market or from collapsed institutions like IndyMac, which is currently being liquidated by the FDIC. Morgan plans to expand offerings like certificates of deposit to its more than 3 million retail brokerage clients.

Goldman and Morgan, however, have a more daunting challenge ahead than simply finding cheap deposits to shore up liquidity: Trust.

The events of the past 15 months, specifically the dramatic government intervention into the free markets, has created a systemic shift in the way the public views Wall Street.

Main Street instinctively knows it shouldn't trust the alchemists of lower Manhattan; we should have learned our lesson after the dot-com crash. But Wall Street simply dreamed up a better disguise, hiding their structured mortgage bets behind the government-constructed façade of affordable housing for all.

Now, the very firms largely responsible for the crisis must go to the public, hat in hand, and ask that they turn their checking and savings accounts over to them.

That may be a tough sell.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opin= =3D =3D3D ion about the performance of securities and financial markets by = the wr=3D iter=3D3D s whose articles appear on the site. The views expresse= d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi= a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web= site is intended to con=3D stitute a recom=3D3D mendation or advice address= ed to an individual investor =3D or category of inve=3D3D stors to purchase= , sell or hold any security, or to =3D take any action with re=3D3D spect t= o the prospective movement of the securit=3D ies markets or to solicit t=3D= 3D he purchase or sale of any security. Any inv=3D estment decisions must b= e made =3D3D by the reader either individually or in =3D consultation with = his or her invest=3D3D ment professional. Minyanville write=3D rs and staff= may trade or hold position=3D3D s in securities that are discuss=3D ed in = articles appearing on the website. Wr=3D3D iters of articles are requir=3D = ed to disclose whether they have a position in =3D3D any stock or fund disc= us=3D sed in an article, but are not permitted to disclos=3D3D e the size o= r direct=3D ion of the position. Nothing on this website is intende=3D3D d = to solicit bus=3D iness of any kind for a writer's business or fund. Mi= ny=3D3D anville mana=3D gement and staff as well as contributing writers wi= ll not respo=3D3D nd to em=3D ails or other communications requesting inves= tment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE