SEPTEMBER 21, 2008 – FEDERAL RESERVE BOARD APPROVES APPLICATIONS OF INVESTMENT BANKING CORPORATIONS GOLDMAN SACHS AND MORGAN STANLEY TO BECOME BANK HOLDING COMPANIES

2008 – FEDERAL RESERVE BOARD APPROVES APPLICATIONS OF INVESTMENT BANKING CORPORATIONS GOLDMAN SACHS AND MORGAN STANLEY TO BECOME BANK HOLDING COMPANIES
Prior to the Great Depression, banking corporations could engage in both both “commercial” (traditional loans to individuals and businesses) and “investment” (stock and other forms of speculative activities) activities. Overzealous speculation by banks using depositors money was one of the causes of the Depression. This led to the 1933 Glass Steagall Act, separating commercial from investment activities. This law was overturned in 1999, leading to a breach in the “firewall” keeping the two types of financial activities separate. This grant application allowed two of the largest investment banks on the planet to gegin engaging in commercial banking activities.