WASHINGTON — A week after Lehman Brothers collapsed and Merrill Lynch put itself up for sale, the two remaining investment banks — Goldman Sachs and Morgan Stanley — won approval Sunday from the Federal Reserve Board to convert to bank holding companies.

The Fed said its approval was subject to a five-day antitrust waiting period but the announcement effectively ends the business of standalone investment banking and dramatically changes the landscape of Wall Street.

To help Goldman and Morgan transition to traditional banking — which carries with it, among other things, tougher capital standards — the Fed said it would allow the firms to pledge the same types of collateral at the discount window as their commercial counterparts. Since the Fed opened the discount window to investment banks in March, the firms have mostly only been able to post highly rated securities as collateral. Now, Goldman and Morgan can send a broader range of collateral to the Fed, including mortgages.

The Fed said the same rule will now also apply to Merrill, which made a deal last week to sell itself to Bank of America Corp.

In addition to the broader collateral rule, the conversions could also be beneficial by allowing Goldman and Morgan to raise money by taking in insured deposits. The move also subjects them to more oversight from the Fed, which regulates bank holding companies.

In a release Sunday night, Goldman said that since spring the Fed has been reviewing the firm’s "liquidity and funding profile, capital adequacy, and overall risk management framework." Goldman said its Tier 1 capital ratio at Sept. 30 was 11.6%.

Goldman did not say what sort of banking charter it would use, but Morgan Stanley said it plans to convert its Utah industrial bank to a national bank charter. Morgan Stanley said it had more than 3 million retail accounts and $36 billion in bank deposits as of Aug. 31. It did not reveal its Tier 1 capital ratio.

Morgan said it would "pursue initiatives to expand the retail banking services it offers its retail clients and build a stable base of core deposits."

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