The FT has reported that:

Goldman Sachs and Morgan Stanley, the last surviving big investment banks on Wall Street, have become regulated banks.

In a statement issued at 9.30pm Sunday, the Federal Reserve said it had approved their applications to become bank holding companies, subject to regulation by the Fed.

During the transition period, the Fed will make loans to both entities and to the broker-dealer subsidiary of Merrill Lynch against collateral acceptable for posting either by a bank or a securities firm.

The Fed will also lend to Goldman, Morgan and Merrill's London-based broker dealer subsidiaries directly.

This means investment banking, which has been so harmful, is dead.

But I've already written this morning about the danger of just providing these people with loans. Real leverage has to be put on them to force compliance with ethical and regulatory reform.

I'm worried that we're not seeing the signs of that.