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The move by Goldman Sachs and Morgan Stanley to become regulated bank holding companies effectively unites U.S. finance into a single sector.

"This fundamentally alters the landscape," a Goldman Sachs spokesman told The Wall Street Journal. "By becoming a bank holding company and being regulated by the Federal Reserve, we have directly addressed issues that have become of mounting concern to market participants in recent weeks."

Along with investment banks, Wall Street's culture of "seven-figure bonuses and lavish perks for even midlevel executives" may be ebbing, notes the New York Times. The developments "effectively (return) Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act," the Times says.

As bank holding companies, Morgan Stanley and Goldman can value their assets as "held for investment," as banks often do, as opposed to valuing them based on current market prices, the Journal points out. It also allows them to accept deposits, a source of real money that has aided banks like Citi, Bank of America (purchaser of Merrill Lynch) and JPMorgan weather the current crisis.

Morgan Stanley has been considering the move for several months, the Journal says. Spokeswoman Jeanmarie McFadden told the newspaper it will begin reducing its leverage ratios to be in line with commercial banks, whose rations are normally in the area of 10. Investment bank ratios are now over 20. (Bank of America and Wachovia had leverage ratios of 11 in the second quarter, the Journal says.)

The Times wonders if Goldman's and Morgan Stanley's decisions will lead the Federal Reserve to regulate hedge funds, "many of the largest of which closely resemble investment banks."

Both banks say the move will bolster their strength.