Goldman, Morgan to become bank holding companies.

Not surprised. And Henry Paulson will benefit indeed being the ex-CEO and current shareholder of Goldman Sachs. Yup, Goldman Sachs and Morgan Stanley to become bank holding companies, enabling them to take deposits, borrow permanently from the central bank, while putting them under supervision of the central bank.

Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night, fundamentally altering the landscape of Wall Street.

The move fundamentally changes one of the mainstay models of modern Wall Street, the independent investment bank, soon after the federal government unveiled the biggest market rescue since the Great Depression. It heralds new regulations and supervisions of previously lightly regulated investment banks. It is also the latest signal by the Federal Reserve that it will not let Goldman or Morgan fail.
Read on.

On a side note: Once at Arm's Length, Wall Street Is Bush's Biggest Donor, New York Times, October 23, 2003: "A study to be released today shows that the financial community has surpassed all other groups, including lawyers and lobbyists, as the top industry among Mr. Bush's elite fund-raisers. The list of those generating $100,000 and $200,000 now includes chief executives like Henry M. Paulson of Goldman Sachs, John J. Mack of Credit Suisse First Boston and Stanley O'Neal of Merrill Lynch, whose firm has already raised twice the amount for Mr. Bush's re-election that it did during the entire 2000 campaign cycle.

How ironic that government buys not only the bad assets held by U.S.-based entities, but also those held by foreign entities like Deutsche Bank, Credit Suisse, Royal Bank of Scotland, and so on. And what is amazing are the connection of the three banks mentioned:

1. Deutsche Bank
Remember A.B. "Buzzy" Krongard? He was the Executive Director of the CIA and brother of former State Department Inspector General Howard "Cookie" Krongard. Buzzy Krongard was president of Deutsche Bank for a while and resigned very near before the 9/11 attacks.

2. Credit Suisse
CEO was one of the major elite donor to the Bush's 2000 and 2004 elections.

3. Royal Bank of Scotland
RBS has been a supporter of the game of golf for over 100 years and is partnered with The First Tee. Who is the honorary chairman of The First Tee? George H. W. Bush. By the way, The First Tee is connected to the OJJDP scandal with OJJDP Administrator J. Robert Flores. One of The First Tee trustees is Ms. Ellen Alemany,Chief Executive Officer, The Royal Bank of Scotland Group, America.