Goldman, Morgan to Shed Risk as Banks

NEW YORK (Dow Jones) -- The Federal Reserve, in an attempt to prevent the crisis on Wall Street from infecting its two premier institutions, took the extraordinary measure on Sunday night of agreeing to convert investment banks Morgan Stanley and Goldman Sachs Group Inc. into traditional bank holding companies.

With the move, Wall Street as it has long been known -- a coterie of independent brokerage firms that buy and sell securities, advise clients and are less regulated than old-fashioned banks -- will cease to exist. Wall Street's two most prestigious institutions will come under the close supervision of national bank regulators, subjecting them to new capital requirements, additional oversight, and far less profitability than they have historically enjoyed.

Already, the biggest rivals of Goldman Sachs and Morgan Stanley -- Merrill Lynch & Co., Lehman Brothers and Bear Stearns Cos. -- have merged into larger banks or sought bankruptcy protection.