Morgan Stanley
Morgan Stanley spun out of JP Morgan after Glass-Steagall. Reputation became worth more than capital.
Henry Morgan and Harold Stanley founded Morgan Stanley in 1935 after Glass-Steagall. The loan came with an advisory fee, 1% of the loan amount. A railroad needing 20 million paid 200,000. Morgan realized railroads would pay premium rates for exclusive advisory relationships. If Morgan advised you, your credit worthiness improved. Competitors assumed Morgan had vetted you. Morgan's reputation was worth real money. By 1890, his approval meant safety. Railroads paid higher fees for his endorsement. Banks paid Morgan a premium to participate in his deals. Morgan's compensation model was pure leverage. He put up capital and earned fees on far larger amounts.
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