Morgan Stanley & Goldman Sachs become commercial banks, regulated by the Fed.

  • More disclosures
  • Higher capital reserves
  • Less risk-taking — borrowing restrictions, for example

But, they will have access to the full array of the Fed’s lending facilities. As a start, MS agreed to sell up to a 20% stake to Mitsubishi UFJ Financial Group, which has $1.1t in bank deposits. Already, Morgan Stanley had $36b in retail deposits as of August 31, and GS had $20b.

Nonetheless: “Today, Goldman Sachs has $1 of capital for every $22 of assets; Morgan Stanley has $1 for every $30. By contrast, Bank of America’s has less than $11 for every $1 of capital.”

“They’re going to have to protect their deposit bases by law, and the days of high leverage are gone…The days of the big bonuses are gone.”

—Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote “Wall Street: A History.”