the VOA Special English Economics Report.
financial companies have moved to other New York streets. But Wall Street still
holds its place in the language as the capital of American finance.
Street is being reshaped by the crisis over mortgage-related securities. The
markets are unable to place a value on them. So banks and other investors are
unable to find a buyer except possibly the government.
is to unblock the flow of credit markets now, then sell the securities later,
when the housing market improves.
new shape of Wall Street will be missing a piece. The credit crisis has ended
the age of big investment banks. This week the last two, Goldman Sachs and
Morgan Stanley, became bank holding companies.
commercial banks, they can take deposits from the public and borrow from the
Federal Reserve at any time. This will help them raise capital. But they will
also face closer government supervision.
Paulson headed Goldman Sachs before he became treasury secretary in two
Stanley also agreed this week to sell up to twenty percent of itself to Japan's
largest bank, Mitsubishi UFJ. And investor Warren Buffett agreed to buy at
least five billion dollars in Goldman stock.
months ago, there were five big, independent investment banks. Then, in March,
J.P. Morgan Chase bought Bear Stearns in a rescue sale. And this month Merrill
Lynch agreed to be sold to Bank of America.
government provided loans to aid the sale of Bear Stearns. But officials
decided to let Lehman Brothers, a one hundred fifty-eight year old investment
bank, fail. Last week the British bank Barclay's purchased much of Lehman in
banks raise money for companies through offerings of stocks and bonds. They
also sell and trade securities and provide other services.
banks could borrow huge amounts against relatively little capital. And they
created ever more complex securities.
Glass-Steagall Act of nineteen thirty-three barred commercial banks from owning
investment banks. Morgan Stanley split from J.P. Morgan as a result of
passed the law to reduce risk to deposits following the stock market crash of
nineteen twenty-nine. But Congress ended Glass-Steagall in nineteen
ninety-nine. Now, commercial and investment banks are together again, much as
they were before nineteen thirty-three.
that's the VOA Special English Economics Report, written by Mario Ritter. I'm