updated 10/6/2008 7:20:35 PM ET 2008-10-06T23:20:35

The Federal Reserve has granted approval for Japan’s largest bank to purchase a stake in U.S. investment giant Morgan Stanley.

The Fed issued an order Monday saying it had approved the request of Mitsubishi UFJ Financial Group Inc. to acquire up to 24.9 percent of the voting shares of Morgan Stanley.

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 in an effort to withstand the severe financial storms raking Wall Street.

The Fed said it had reduced its normal 30-day review period to just 10 days “in light of the unusual and exigent circumstances” which are currently roiling financial markets.

The administration and the Fed both moved to implement a series of measures on Monday in an effort to calm markets which are being buffeted by the biggest upheaval on Wall Street in decades.

Last month, Waren Buffet’s Berskhire Hathaway Inc. said it was investing at least $5 billion in Goldman Sachs while Morgan Stanley sold a stake to Mitsubishi for more than $8 billion.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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