At the end of 2009, there will be a new CEO at Morgan Stanley. John Mack, the company’s current Chairman and CEO, will step down and will be replaced by James Gorman. Currently, Gorman is Morgan Stanley’s Co-President. Gorman will also be joining the company’s board of directors.
Mack fully believes that Gorman is the right man for the job.
Said Mack: “John and the Board believe James Gorman is ideally suited to lead Morgan Stanley forward. James has a long track record of developing aggressive strategies backed by strong operating skills and relentless execution.”
The 64-year-old Mack deserves recognition for leading Morgan …read more

Morgan Stanley will repay the $10 billion in federal bailout loans on Wednesday, according to the Associated Press. A week ago, the company said it would pay it back but didn’t give a specific time line.
The bailout money came from the Troubled Asset Relief Program, a program that was set into motion to help the financial industry in the United States and attempt to cushion the blow of the economic downturn.
In a press release, Morgan Stanley stated that they believe the Troubled Asset Relief Program was a success.
Morgan Stanley is pleased to be repaying its $10 billion in TARP capital …read more

Morgan Stanley, a global company in the financial and banking industries, said the company would be lowering the bonuses some executives were scheduled to receive. Base salaries would also be adjusted, according to Morgan Stanley in a filing with the SEC.
After AIG executives were roasted for receiving scheduled bonuses, this sounds like a good idea by Morgan Stanley. According to multiple accounts, Morgan Stanley received a lot of help by the United States federal government during the recent financial crisis. Like with AIG, people around the country could have been up in arms with Morgan Stanley if reports indicated that …read more

Thanks to good news coming out of the banking industry, Tuesday saw the stock market rally after a slow start. Many experts are saying Timothy Geithner, the Unites States Secretary of the Treasury, played a vital role in increases confidence in the nation’s banks.
By the end of the trading period, the Dow Jones industrial average was at 7,969.6 — up nearly 1.7% on the day. NASDAQ was up 2.2% to 1,643.9, Russell 2000 was up nearly 4% to 470.1 and the S&P’s 500 was up approximately 2% to 850.1.
On Monday, banks suffered mightily on the stock market. On Tuesday, they …read more

I hope the AIG press this week has made it clear that we all need to do a better job at understanding what finances the world around us. This week’s links are highly educational. (Don’t be scared – one’s a video!)

Oxdown Gazette had a very interesting piece about Morgan Stanley and Goldman Sachs issuing FDIC insured debt, plus other tasty tidbits re: The Bailout.  FDIC = Federal DEPOSIT Insurance Corporation. So now debt insurance too? This piece is a great education for anyone who wants to understand why these two securities firms wanted to become ‘banks’ in the first place.
IRS Commissioner Doug …read more

Wow, what a difference a week makes. 
Last Friday, October 10th, shares of Morgan Stanley closed at $9.68.  Today, October 17th, shares of Morgan Stanley closed at $19.24.  That equates to just under a 100 percent return in one week. 
This week has been a crazy week and with all of it’s flip-flopping, the Dow managed to end the week in positive territory.  So, in a week which saw the Dow gain 5 percent, what about this week pushed Morgan Stanley to double up?  Well, when you zoom in on Morgan Stanley, it wasn’t the week that made the difference, it was just one day.
On Monday, Mitsubishi …read more

Last night, Goldman Sachs and Morgan Stanley dropped their investment bank status to convert to bank holding companies.
The conversion will allow them to access emergency funding from the Federal Reserve and replaces their regulatory body, the SEC, with the Federal Reserve.  As such, both banks will be subject to more strict regulation and capital requirements.
The Fed has already extended resources typically reserved for commercial banks to the investment banks.  Looks like the organizational change just makes it okay on paper to do what has already been done in practice. 
Is this organizational change just a sugar-coated bailout?

One by one, the nation’s largest investment banks are announcing plans to buy back auction-rate securities.   Thick as thieves, aren’t they?  ;)
Today’s announcement came from Morgan Stanley, which will buy back up to $4.5 billion worth of auction-rate securities from retail customers who purchased them before February 12th and sold the securities at a loss on or before August 11th.
Securities sold to institutional investors will not be a part of the buyback, but Morgan Stanley will attempt to help the largest of those led into the ARS market with other liquidity solutions.
Last week, Morgan Stanley agreed to pay $1.5 million to regulators in …read more

Yesterday, New York Attorney General Andrew Cuomo announced that his office intends to file fraud charges against Citigroup.  The charges surround Citigroup’s alleged fraudulent marketing and sale of auction-rate securities to investors. 
Auction-rate securities are long term bonds sold at weekly or monthly auctions, often issued by municipalities or corporations.  Citigroup is accused of marketing these long-term bonds as cash equivalents and selling them to everyday investors.  
The market for auction-rate securities was very liquid prior to the credit crunch.  But, the crunch left investors stuck with illiquid, long-term bonds instead of a safe, liquid alternative to cash.
Citigroup’s auction-rate securities sales are also the subject of a formal …read more

Morgan Stanley is the latest investment bank to post poor earnings.
Revenues were down 38 percent, profits were down 57 percent, and the bright side (if there is one) is that Morgan Stanley was able to turn a profit.  For the fourth quarter of last year, the company posted its first loss ever: a whopping $3.6 billion, the result of a $9.4 billion write-down from subprime and mortgage related investments gone bad.
Some of the highlights of this quarter’s lackluster results include lower investment banking revenues, bad bets on electricity and oil, and losses in real estate investments.  Sound like a broken record?
Stay tuned as more IBs continue to blame the credit crunch for …read more