While most of us were logging in couch time and watching the Emmys [1] on Sunday night, the Federal Reserve was hard at work creating a new measure that converted investment banks Morgan Stanley and Goldman Sachs into traditional bank holding companies [2]. The two firms were the last standing independent investment banks [3] on Wall Street, and the conversion to bank holding companies truly marks the end of an era.

As bank holding companies, the two companies will be regulated by the Fed and held to much stricter capital requirements than in their previous independent lives. In order to preserve and increase liquidity, the banks will now rely on deposits for capital instead of short-term funding, and the reclassification will allow the banks to build up banking activities [4] on top of the existing investment focus.

Source [5]