Goldman Sachs Group Inc. (GS) announced that it has received Federal Reserve’s approval on August 14, 2009 to become a financial holding company.

Goldman had intended to seek FHC status when it first converted to a Bank Holding Company last year. The designation allows Goldman to continue to participate in non-banking financial activities, including private equity among other businesses.

A financial holding company (FHC), as stated in the Gramm-Leach-Bliley Act of 1999, is a financial entity engaged in a broad range of banking-related activities that include insurance underwriting, securities dealing and underwriting, financial and investment advisory services, merchant banking, issuing or selling securitized interests in bank-eligible assets. It can also engage in any non-banking activity authorized by the Bank Holding Company Act. The Federal Reserve Board is responsible for supervising the financial condition and activities of these companies.

Morgan Stanley
(MS), JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) are some of the many companies that have already acquired the status of a financial holding company.

There was some speculation that Goldman might shed its holding company status to return to an investment bank model after it repaid the Troubled Asset Relief Program (TARP) money and the Treasury Department warrants. However, now it seems that Goldman will continue to be under the supervision of the Fed for some time.
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