In a deal that will greatly expand the "scale and breadth" of the bank's Wealth Management franchise, Morgan Stanley
The deal was made possible by Dodd-Frank regulation rollbacks the Trump Administration has enacted. These regulations were put in place after the crash to monitor banks to make sure they didn't, once again, become "too big to fail". Analysts are now worried that banks will begin engaging in the same kinds of dangerous practices that led to the 2008 crash.
"Nothing to see here, just a Wall Street bank trying to increase its size, operational complexity, and interconnectedness...while regulators roll back post-crisis rules...while risks are building in the financial system," Gregg Gelzinis, senior policy analyst for Economic Policy at American Progress, tweeted in response to a New York Times
E-Trade has more than 5.2 million client accounts compared to Morgan's existing 3 million clients, but Morgan's clients represent $2.7 trillion compared to E-Trade's $360 billion. This goes to show the difference in wealth levels between E-Trade and Morgan clients, something which Morgan undoubtedly took into account.
Acquiring E-Trade "will significantly increase the scale and breadth of Morgan Stanley's Wealth Management franchise, and positions Morgan Stanley to be an industry leader in Wealth Management across all channels and wealth segments," Morgan Stanley said in a statement.
This deal is another sign of the profitability of online brokerage services. Just months ago, Charles Schwab
This deal has been on Morgan Stanley Chief Executive James Gorman's mind since 2002, he told the Wall Street Journal Thursday. It was the Schwab/TD Ameritrade deal which made Gorman's plan possible after all those years.
These deals illustrate "the increasingly powerful drive toward ever-greater concentration of market power in the financial industry," said Cornell Law Professor of financial regulation and banking law Saule Omarova. According to Omarova, managing ordinary people's money is becoming more and more profitable as technology advances.
Meanwhile, banking is becoming increasingly lawless. This puts the whole financial system at risk.
"Reducing the stringency of bank capital requirements, liquidity rules and stress testing makes large bank failures more likely, while watering down living wills requirements magnifies the economic devastation caused by such failures," Gelzinis said after Trump eased restrictions in late 2019.
