Goldman Sachs and Morgan Stanley were the latest to dramatically change as a result of the global banking crisis. The two investment banks said they'd rather be 'bank holding companies'.
By reclassifying themselves, they gain access to new sources of funding. They can borrow from the Fed, which has offered cheap money as the crisis unfolds. They may also go into retail banking - offering savings accounts and CD's to the general public. While the source of customers is uncertain, they'll probably offer these services to existing investment customers and buy up small regional banks.
Why not become a bank holding company? Regulation. The firms will face increased scrutiny in an environment where regulation is sure to increase. The tradeoff is clearly worth it at the moment - these firms want to appear secure and find a safe harbor with access to easy government money.
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