Goldman Sachs and Morgan Stanley change their LOB.

It seems that US financial crisis is still not over, today two another biggest Investment banks, Goldmann Sachs and Morgan Stanley at Wall Street approach federal reserve to change their LOB from Investment banking to more regulated Commercial or retail banking.

Reason behind the decision :
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Recent fall of Merrill Lynch and Lehman Brothers really hit the backbone of the financial industry in US. Even these two Investment banks were also had the substantial exposure to subprime mortgage loans on their books, which resulted in heavy quarter looses. As in this difficult times its very difficult to get loans from the money market, so they decided to move to more safer and regulated commercial banking space.

Impact on this decision :
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These banking operation of these banks will be more regulated. They can approach Federal Reserve for the bailout loans without any hassle.

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Thanks&Regards,
Mohit Kumar