Morphing Financials: Bank Holding Companies

You saw the headlines: Goldman Sachs and Morgan Stanley — the last of the Mohicans in terms of large independent banks - are morphing into "bank holding companies". So what's that mean? It means: 1) They will leverage less - i.e. they will be more risk adverse in their investments; 2) They will have tighter oversight/regulations - but have access to the Fed lending window like other banks; and 3) They'll be in a position to purchase a regular brick and mortar bank like where you currently have your checking account, and after that... They'll look exactly like other banks.

Here's why you care: You care because you/we/us want need stability in the financial world. Ultimately being a "bank holding company" allows these banks to have a revenue stream from normal banking activity. And given the number of financial institutions on the skids, having a greater number of healthier players helps you - the consumer. On the flip side, the question is out as to what is lost in diversity in the financial sector. Independence does have its advantages.

Why You Care notes that we did not publish Next Week's News Today last week because of the dearth of scheduled events for this week, and frankly things were moving to fast to accurately predict what was/is going to happen. We hope to be back on track this week.