US Banks Surprise Change in Status

US investment banks Goldman Sachs and Morgan Stanley have changed their status to become bank holding companies. This will enable them to secure more funds by opening commercial banks.

The move, which is part of a massive financial restructuring effort on Wall Street, will also give these two banks access to Federal Reserve support. The US treasury has announced a $700 billion package to deal with the worst financial crisis for decades.

There had been fears, given the recent turmoil on the financial markets that Morgan Stanley and Goldman Sachs would not be able to survive.

The last few weeks have seen dramatic and surprising changes, with Merrill Lynch being bought by Bank of America and Lehman Brothers filing for bankruptcy protection. Earlier this year, Bear Stearns was acquired by JP Morgan Chase.