Morgan Stanley may incorporate its German investment bank into its holding company under an exception granted Thursday by the Federal Reserve Board.
The approval wasn’t without its detractors. Fed Vice Chair Philip Jefferson and Fed Govs. Michael Barr and Lisa Cook – each of the board’s three Democrats – dissented. But the exception still passed, 4-3.
The crux of the exception lies in Section 23A ...
The strongest version of this narrative highlights a legitimate regulatory dilemma: balancing competitive fairness for U.S. banks against systemic risk. Morgan Stanley’s argument—that peers already operate under similar structures—finds support in Bowman’s assertion that no material losses have arisen from these arrangements. The Fed’s decision reflects a pragmatic approach to global finance, where rigid adherence to Section 23A could disadvantage U.S. firms. However, the dissenters’ concerns ar...