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9/22/2008 5:39:27 AM - Goldman Sachs and Morgan Stanley to Become Bank Holding Companies

It was announced yesterday that Goldman Sachs and Morgan Stanley - the last two major investment banks - were going to become bank holding companies. They will therefore be more highly regulated in the future but will have access to consumer deposits (at branches they'll likely start acquiring soon) and the Federal Reserve's Discount Window. In essence, they'll be safer financial institutions with less leverage and lower future returns.

This will likely impact MLPs in the short term. The reason is that this will require those two institutions to delever significantly - from roughly 25 to 1 down to about 10-12 to 1.

I suspect that their delevering will be more gradual and orderly than what was seen with Lehman but it will throw one more tailwind into the face of MLPs in the near term. That said...I will be a buyer if they continue to fall.

- Roulette

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