If you want something done, do it yourself. As we reported on Friday Morgan Stanley was no closer to securing a buyer to shore up the investment bank however this weekend saw it take probably its most dramatic decision in its 73 year history. Morgan Stanley, along with Goldman Sachs, has been allowed by the Federal Reserve to reclassify itself from an investment bank to a bank holding company. This is not just a semantic change as it allows the 2 companies to open commercial banks, accept deposits and therefore, hopefully, shore up their balance sheets as credit markets continue to remain illiquid. As with all things however there is a downside for these companies in that the risks that they were able to take as investment banks will not be possible anymore and therefore profits will probably dwindle over the coming years.

Also publicised over the weekend was the US government plan to buy up all the toxic debt that has been paralysing the credit markets in recent months. Congress, especially Democratic party members, have already started to moan however at the size of the bail out but also at the fact that foreign owned banks may be able to take advantage of this measure and therefore have their rescues bought and paid for by Joe Public USA. We doubt however if partisan politics will be played by the Democrats as Barack Obama has been gaining in opinion polls for the US presidential elections as he capitalises on McCain’s Wall St cosiness.

Overnight sterling has been hit by more bad news from the UK housing market. Asking prices were down 1% in the first 3 weeks of September and are now down 3.3% on a yearly figure. The figures were given a slightly morbid note as well as Rightmove noted that what activity there was was being driven by ‘death and divorce’. The UK housing market is most definitely ‘on its knees’.

  Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.