U.S. Fed approves Mitsubishi to purchase stake in Morgan Stanley

WASHINGTON, Oct. 6 (Xinhua) -- The U.S. Federal Reserve authorized Japanese bank Mitsubishi UFJ Financial Group Inc. on Monday to purchase a stake in U.S. investment giant Morgan Stanley.

The Fed said in a brief statement that it had approved the application of Mitsubishi UFJ Financial Group Inc., Japan's largest bank, "to acquire up to 24.9 percent of the voting shares of Morgan Stanley."

In an effort to withstand the severe credit crisis, both Morgan Stanley and Goldman Sachs, the last two major independent investment banks in the United States, won approval last month from the Fed to convert to bank holding companies.

The step taken last month by the two investment banks followed forced sale of Merrill Lynch & Co. and the failure of three other huge banking companies -- Bear Stearn Co., Washington Mutual Inc. and Lehman Brothers Holdings Inc..

All of them were felled by bad mortgage investments.