Goldman and Morgan become bank holding companies

Goldman Sachs and Morgan Stanley have applied to the US Federal Reserve to become bank holding companies, in response to the crisis that has seen the bankruptcy of Lehman Brothers and the acquisition of Merrill Lynch by Bank of America.

The Fed announced on Sunday it had approved the application, subject to a five-day antitrust waiting period.

During the transition period, the Federal Reserve Bank of New York will extend credit to the US broker-dealer subsidiaries of Goldman and Merrill against all types of collateral pledged at the Fed’s primary credit facility for depository institutions or at the existing primary dealer credit facility. The New York Fed will also extend credit to the two firms’ London-based broker-dealer