Goldman Sachs and Morgan Stanley Approved to Create Commercial Banks

According to the AP ("Last major investment banks change status"), today the Federal Reserve approved requests by Goldman Sachs and Morgan Stanley to change their statuses to bank holding companies and create their own commercial banks. This makes sense, since the large combined commercial bank/investment bank conglomerates (e.g., JP Morgan Chase) have proved to be more stable than the stand-alone investment banks (e.g., Bear Stearns, Lehman Brothers) during the current credit crisis. Something to keep in mind next time you hear a pundit blame the current financial crisis on the 1999 Gramm-Leach-Bliley Act, which repealed the provisions of the depression-era Glass-Steagall Act that separated commercial banks from investment banks.