2008 will go down as the year that Wall Street changed forever. Bear Stearns, Merrill Lynch, and Lehman Brothers have disappeared from the financial landscape as standalone entities. The U.S. government now owns Fannie Mae and Freddie Mac, and recently added American International Group to its burgeoning portfolio of financial basket cases.
The remaining large broker dealers Goldman Sachs and Morgan Stanley have applied for and received approval to become bank holding companies. This means they will now become commercial banks. In other words, they will be able to take in deposits and thus not be so vulnerable to the cost of borrowing in the wholesale money markets.
The credit crisis has changed the financial landscape on Wall Street forever, and these changes will continue as the surviving participants continue to maneuver (with the help of the Treasury and the Fed) to remain competitive.
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