End of era for US banks

America’s last two investment banks Goldman Sachs and Morgan Stanley have changed their status to become bank holding companies.

The switch will enable them to take deposits from investors and will enable both to raise more funds by opening commercial banks. It will also give them access to Federal Reserve support.

The US government has announced a $700bn (£382bn) package to tackle the worst financial crisis for decades.

Congress is considering the plan, drawn up by Treasury Secretary Henry Paulson, which would set up a fund to buy back much of the bad debt held by financial institutions, which had triggered the credit crisis.