Shares of Morgan Stanley (MS) are down about 1.4% this afternoon, which may be a little profit-taking after the bank’s stock has surged about 18.5% in January.
It’s been a good month for�shareholders of�Morgan Stanley, which not only produced healthy quarterly earnings that felt like the start of better things to come, but also continued its restructuring, announcing 1,600 layoffs.
But just when you think this or that bank has put the bad old days behind it…
On March 16, 2007,�Morgan Stanley�employees working on one of the toxic assets that helped blow up the world economy discussed what to name it. Among the team members� suggestions: �Subprime Meltdown,� �Hitman,� �Nuclear Holocaust� and �Mike Tyson�s Punchout,� as well a simple yet direct reference to�a bag of excrement.
Ha ha. Those hilarious investment bankers.
Then they gave it its real name and sold it to a Chinese bank.
That’s from Jesse Eisinger’s piece today about what’s in court documents the bank was forced to hand over in a lawsuit brought against it by a Taiwanese bank. I strongly suggest you read the whole thing, but here’s more of the dirty details:
Finally, by early 2007, the bank appears to realize that the subprime market is cratering even worse that it expects. Even the supposedly safe pieces of C.D.O.�s that it owns, including its piece of [a subprime C.D.O. called] Stack, are facing losses. So Morgan Stanley bankers set to scouring the world to peddle as a safe and sound investment what its own employees are internally deriding.
Morgan Stanley declined to comment on whether it made money on its Stack investments over all. But it looks to have turned out well for the bank. In Stack, it managed to fob off a nuclear bomb to the Taiwanese bank.
With serendipitous timing, Morgan Stanley CEO James Gorman was on Bloomberg Television today and asked was how far the financial industry has moved towards winning back the trust of the public, its customers and government:
It is a journey. The heart of it is that the financial crisis destroyed a lot of confidence and trust and there have been a lot of misinformation since then, so it has been a slow build. But I think it starts with the amount of capital and liquidity banks have now put to work inside their own organizations. So they are a lot safer. A lot of the management has changed inside these organizations and a lot of the businesses they engaged in pre-crisis, they are not engaged in now. I think the trust is coming back, but it will be a multi-year journey.
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