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The Fed said its board had approved the applications of Goldman Sachs and Morgan Stanley to become bank holding cos

Goldman Sachs and Morgan Stanley have abandoned their investment banking status in return for a cover under the Fed to survive the current U.S. financial storm. Under the radical revamp, two banks will be transformed into bank holding companies regulated by the central bank, to gain an easier access to credit which can help them ride out of the current financial crisis. This rescue, the largest ever in banking will make it easier for the two banks to buy other retail banks.

In a statement released Sunday night, the Fed said its board had approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies and authorised credit to the two firms "against all types of collateral" that commercial banks can use to get loans from the central bank.

This is a defining movement as it signals the end of Wall Street which was till now a group of lightly regulated investment banks. The report suggests that this is the latest effort by the U.S. authorities to restore calm to the unrest financial markets. This move will make Goldman Sachs, the fourth largest banking globally.

The recent happenings have changed the face of Wall Street with Lehman Brother’s faiure, the sale of Merril Lynch and a government bail out of AIG.