The run on Morgan Stanley

[ASusilovic]

This is a pretty stunning line to read:

“We need a merger partner or we’re not going to make it,” Mr. Mack told Mr. Pandit, according to two people briefed on the talks. Mr. Pandit, a former senior investment banker at Morgan Stanley, said Citigroup was not interested.

What might Mack have had on his mind? Afterall, only the other day he was supposedly telling MS employees that everything was just fine, notwithstanding the destructive antics of rumour-mongering short sellers.

We’re hearing everything is not just fine. Dealbreaker notes that MS prime brokerage clients are heading for the hills.

We’ve heard a few tentative numbers - with outflows of prime brokerage business from MS of between $20bn and $120bn being rumoured.

JPM is thought to have taken on board $40bn of prime brokerage accounts in the past 48 hours alone. They have been “inundated”.

It’s very much a run on the bank. The collapse of key prime brokerage accounts is exactly what nailed the lid shut on Bear’s coffin even as its executives were bemoaning the share price collapse and touting its strong liquidity position.

Little wonder then that MS is in talks with a number of parties.

http://ftalphaville.ft.com/blog/2008/09/18/16082/the-run-on-morgan-stanley/

 

[bidask]

isn't the revenue from prime brokerage only a small part of an ibank's total revenue?

 

[Daal]

how come we are not hearing from joe stiglitz that repealing glass stegal was a bad idea. imagine if it was still in place, they would have nowhere to run

 

[ASusilovic]

Truth, the flexibility of facts, and market panics
Sep 18 16:35
by Paul Murphy
Comment
(23 comments)

Phone rings…

FT Alphaville: Hello, Murphy

Morgan Stanley PR: Hi, this is XXXXX from MS. Have you seen the information on Bloomberg? Mr Mack did NOT say these things. And I’m just calling to get your post on this taken down, More…

Phone rings…

FT Alphaville: Hello, Murphy

Morgan Stanley PR: Hi, this is XXXXX from MS. Have you seen the information on Bloomberg? Mr Mack did NOT say these things. And I’m just calling to get your post on this taken down, so can you take it down?

FTAV: No. We’ve noted the Mack denial - published snaps from Reuters. We will link to that and make denial clear. But the post stays up.

MS felt: You can’t believe the stuff that’s going around. People are just making things up…

FT AV: So what does the NYT say?

MS felt: Oh, that’s being dealt with by our NY people. I’m just ringing round getting stuff taken down…

Who knows whether the Mack comment, published by one of the most respected media titles on the planet, is true? We don’t and we’d guess the MS felt it is not 100 per cent sure either. We are not saying he is lying. We are just saying that in these febrile times “facts” take on a malleable form.

If you are John Mack and your stock’s in freefall, and you’re weighing what you might say to save your bank and what you might have to confess at the Pearly Gates - well, the bank wins and heaven can wait.

As it happens, on this occasion, forced to guess, we’d go with Mack; these are stressful days for reporters as well as financiers.

But there’s a more enduring issue here: lying to the financial media has become routine in recent years, encouraged by the tightening noose of market regulation. In short, answering media enquiries accurately can often constitute a breach of the market abuse regime. The truth quite literally becomes a criminal matter - and the result is a growth in speculative news reports.

http://ftalphaville.ft.com/blog/2008/09/18/16085/truth-the-flexibility-of-facts-and-market-panics/

 

[flytiger]

Quote from ASusilovic:

This is a pretty stunning line to read:

“We need a merger partner or we’re not going to make it,” Mr. Mack told Mr. Pandit, according to two people briefed on the talks. Mr. Pandit, a former senior investment banker at Morgan Stanley, said Citigroup was not interested.

http://ftalphaville.ft.com/blog/2008/09/18/16082/the-run-on-morgan-stanley/

Especially since it's fake. I should have known better. I went in thinking MS an d GS were higher into Friday, and I got creamed. How in the world would a convesation between Mack and Pandit get out like that? jSame old shenanighans. Volatility, rumors, blow thru support.

What you neglected to post was, the two NYTimes reporters neglected to confirm their story with either MS or C. They are in deep shit. It was a plant from one of their contacts, who had a vested interest in that news being in the paper.

I was very pleased to track it down, and turn it over to the authorities, especially since it cost me money. I made it all back on some other squeezes, but that 's not the point.

 

[capmac]

The Last Days of Morgan Stanley

posted on: October 09, 2008

If Morgan Stanley (MS) was in distress back in mid-September, it's much worse today, trading as low as $12.50 a share: that's just 40% of its stated book value. For all the denials coming out of the bank, clearly the market is very skeptical that the injection of cash from Mitsubishi UFJ Financial Group is going to happen -- or that even if it does happen, it will be sufficient to stave off insolvency. After all, even $85 billion wasn't enough for AIG, and MUFG is putting much less than that into Morgan Stanley, which has a similarly-sized balance sheet to AIG.

It looks like we're getting close to one of the market's vicious syllogisms here: Without the market's trust, Morgan Stanley is nothing. The market doesn't trust Morgan Stanley. Therefore, Morgan Stanley is, well, toast.

My guess is that at some point over the weekend, Hank Paulson will announce that he's using his new authorities under the TARP to effectively nationalize Morgan Stanley, following Gordon Brown's lead in the UK. And Morgan Stanley will only be the first of many banks to suffer such a fate.

http://seekingalpha.com/article/99146-the-last-days-of-morgan-stanley?source=yahoo

 

[dhpar]

note that NOW you can short MS stock if you are with Interactive Brokers...
I thought it was expiring AFTER today...(?)

 

[stock777]

It's getting almost impossible to tell where the lies begin, and the self fulfilling perceptions end.


I think its because there are only two kinds of people. Crooks and Suckers.

Which are you?

 

[Susannah]

Quote from bidask:

isn't the revenue from prime brokerage only a small part of an ibank's total revenue?

But doesn't it provide the collateral to do everything else they do? Not sure on that, but I think so.

 

[flytiger]

10k after the close. They do n't need money this year, and next year will use deposits (they are a bank, remember) and equity issuance.

This is a raid to make easy money and if they crush it tomorrow, maybe they can drive Mitubishi away. That would be their thinking.

We don't need 20000 more unemployed in NYC. We don't need to show the world that we will destroy our brothers for a buck. I mean, everyone knows we'll do it, but we shouldn't flaunt it.