This Bloomberg news story announces that Morgan Stanley and Goldman Sachs have been approved to become bank holding companies.
What a difference a decade makes. A decade ago, everybody wanted to be an investment bank, and it was the commercial banks rushing to get in. It was the investment banks who could leverage their investments, thereby achieving superior returns. Now, this business model has been rendered inutile, and the name of the game is now being the fund source yourself.
It’s now way much better to be a commercial bank than an investment bank. You are funded by low-cost deposits, you have more boring but recurring income, and most importantly------you are first in line for a Fed bailout!
Hail to the new masters of the Wall St. universe, the commercial banks.