Wall Street has resisted attempts to increase regulation for decades. So the decision by the two most prominent US investment banks to voluntarily submit themselves to scrutiny from the Federal Reserve is a vivid illustration of the changes in the regulatory landscape.
The move by Morgan Stanley and Goldman Sachs is a final recognition that the blurring of the lines between commercial banking and investment banking requires a new regulatory framework for the financial services industry.
The changes in the shape of the industry date back to 1999 and the passage of the Gramm-Leach-Bliley Act, which allowed a merging of commercial and investment banking. The act effectively repealed the Glass-Steagall Act, the 1933 legislation that had enforced a separation between the two activities.