Goldman, Morgan Shift Operations as Wall Street Reels

GWEN IFILL:

Next, the continued reshaping of Wall Street. Jeffrey Brown has that story.

JEFFREY BROWN:

The end of an era came last night with the announcement that the last two major investment banking firms, Morgan Stanley and Goldman Sachs, would convert themselves into bank holding companies.

Andrew Ross Sorkin is covering that part of the financial crisis story for the New York Times. He's also the editor of Deal Box, the paper's business blog.

So, Andrew, why did this happen? Was there finally a sense that it had come down to changing the business or not surviving?

ANDREW ROSS SORKIN, New York Times:

I think we were really at the precipice. And when you look at what Goldman and Morgan were up against, they were the next two dominos, if you will, to fall, to falter.

And I think really this is a tacit acknowledgment that the old model of Wall Street, at least as we know it — and what I mean by that is the investment banking model of effectively trading, what they call proprietary trading, almost like a hedge fund, using your own money to make huge bets, oftentimes with lots of leverage on top of that, wasn't going to work in this world anymore.

And going forward, what they really needed was a cushion. And that's what commercial banks have historically had. They've had that cushion, those deposits from you and myself and all those people who use ATM machines, and that has made them, at least in this environment, the safe haven.