If you're an investment bank, the stable deposits of a commercial bank, even an ailing one, look pretty attractive right now. Even before the news hit that Morgan Stanley was in talks with Wachovia, people were speculating that both Morgan Stanley and Goldman Sachs ought to think about deals. It makes a lot of sense for Morgan Stanley, providing assurances as to capital ratios. Other banks apparently have voiced interest in Morgan Stanley as well. For them, the idea may be a bit less compelling. They get to be part of a much larger, very diversified enterprise that might offer some product synergies. As for Goldman Sachs, the big news was that it was conducting an auction of Washington Mutual. Wells Fargo, HSBC and JPMorgan Chase are said to be interested. But you have to wonder if it's thinking about buying a bank outright.

For more:
- here's an article about Morgan Stanley in the New York Times
- and here's one about WaMu

Related Article:
Bank merger deals not likely