Too Big to Fail!

To further the discussion on investing ideas in the banking sector I found this article in the NY Times interesting. It details the change of these investment banks back into a bank holding company.

http://dealbook.blogs.nytimes.com/2008/09/21/goldman-morgan-to-become-bank-holding-companies/?hp

If Stephen Colbert's thesis is correct, then Goldman and Morgan Stanley will benefit from being the favoured ones and will definitely be too big to fail. You can't help but think that good ole Hank Paulson will make sure GS and MS buy up cheap assets and banks. Under the new $700 billion proposal these (and others) investment banks will be able to sell their toxic assets to the gov't and then potentially buy them back in a few years and make a killing!

The other side of the argument is that investment banking in its current form is dead and the super leverage they utilized will come under closer scrutiny.(until the next bubble!)