The Reconstruction

This evening, Goldman Sachs and Morgan Stanley both received approval from the Fed to convert from investment banks to bank holding companies. With this, the great majority of the US investment banking sector has effectively re-regulated itself. To quote Tyler Cowen, “Whew! I’m sure glad they repealed the Glass-Steagall Act.” The [...]

From the WSJ:
A Chaotic Sunday Opens Wall Street’s Week
Moral Hazard’s Exit
Leaves Investors
To Sort Out the Mess
By ANNELENA LOBB
September 15, 2008; Page C1
Investors are going to be staring in the face of moral hazard when markets open Monday.
The collapse of Wall Street firm Lehman Brothers Holdings Inc. coupled with a restructuring of insurer American International Group [...]