Hank Paulson wants to spend $700 billion to buy up banks bad debt in the hope it can ‘fix’ the crisis on Wall Street. But there are ways to profit from the madness. Martin Hutchinson has picked three winners.

Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), the two last major investment banks left standing after the carnage Wall Street, have ended the era of investment banking by changing their status to bank holding companies. The change means the two firms can now create commercial banks that will be able to take deposits.

In a move that transforms the two remaining major investment banks on Wall Street, federal regulators on Sunday night changed the status of Goldman Sachs and Morgan Stanley to bank holding companies.

The New York Times has an interactive graphic that visually conveys the impact the current market crisis has had on the financial sector. It has market cap scaled regions for two time periods, September 12, 2008 and October 9, 2007. It would be interesting to have a similar chart by a value metric, such as book value.

Now that's a major market headline. Fear strikes Wall Street as several significant events hit the financial sector.

The SEC has it backwards

The SEC has it backwards

The Securities and Exchange Commission (SEC) moved against short sellers this week. This is a gross double standard, says Dave Gonigam in Desidooru Saloon. Many of the companies the SEC is protecting from short sellers profit from shorting stocks…

China needs to diversify out the diving dollar and gain greater control of energy reserves - and Latin America serves both purposes best…

Now will people look at Dow?

Bottom line: The current rout in financial sector shares might smell awful to the simple onlooker. But smart investors should know that it smells like the beginning of the end of their collapse, too.

This week saw Lehman Brothers replace two of its top executives: CFO Erin Callan and COO Joseph Gregor. The two will remain at the bank in lesser roles.

“As recently as a month ago,” says Justice Litle in Taipan Daily, “Erin Callan was on top of the world.”

No article to read here; however, I am interested in this question too.

Ideas from various investment newsletter writers on how to play yesterday's market declines resulting from the sell off in China.

Toward the end of the article, John Christy made the following intelligent point: "Why would a Brazilian airline like GOL be hurt by this? How on earth would the fundamentals of, say, Turkcell be remotely affected. You should back up the truck on those names. Same on

Morgan Stanley will spin off its Discover credit-card division. Morgan Stanley expects to issue shareholders stock in Discover during the third quarter of next year on a tax-free basis.

Readers of Value Investing News know that spin-off / special situations can lead to investment opportunities. Let’s keep our eyes on this one.