Posted by
rycK on Friday, September 26, 2008 10:55:23 AM
The Investment Bank Mentality that Trashed
Wall Street: Morgan Stanley and the Big Mack Attack.
Here is a flash-back
to the investment banking ‘thinking’ and business acumen from June 2006. It
gives us a hint of what kind of players the Wall Street Mavens were employing
and rooting for to get more business and profits. Watch this video:
http://jevica2003.blogtownhall.com/2008/09/26/video_financial_crisis_in_10_minutes_or_less_[enough_blame_to_go_around].thtml
“Amid the endless applause from hundreds of traders, bankers, and
research analysts, one of Wall Street's fiercest warriors was becoming
teary-eyed. The day was June 30, 2005. The place was Morgan
Stanley's Manhattan headquarters, where John J. Mack had abruptly said goodbye to his colleagues
four years earlier. The occasion was Mack's return to become CEO, replacing
Philip J. Purcell, who had resigned weeks earlier after mounting criticism
that he was mismanaging the famed investment bank, which once rivaled Goldman
Sachs & Co. for supremacy on Wall Street.” Morgan Stanley's Mack
Attack--New Morgan Stanley CEO John J. Mack is winning over critics—and now,
shareholders JUNE 21, 2006 . [Emphasis is mine in
all quotes.] This link references all quotes in this essay unless indicated
otherwise.
Oh! Didn’t
MSDW almost go broke? Maybe they are.
“As one executive recently put it, the bank had become so risk-averse and mired in second-guessing that every time someone brought up
a new idea for a business it was shot down by a "culture of no."
While rivals such as Goldman, Merrill Lynch, and Lehman Brothers were making acquisitions
and diving into risky but profitable endeavors, senior managers at Morgan Stanley were sending people with
bold notions back to the drawing board. The cautiousness cascaded down from the
top. Purcell was so
worried about potential liability, says someone who worked with him, that he
didn't even use e-mail. (Purcell declined to comment for
this story.)”
I thought Lehman Brothers went down?
Goldman is barely alive.
“He's doing much more than glad-handing, though: He's building
out new businesses and putting vast sums of money at risk, both for the bank and on behalf
of its clients, in an effort to catch
up with Goldman in the ever-more-important trading business. “
This is so wonderful. Aren’t the stockholders and
clients proud of Mack??
“ "If you go back to the mid-'90s, there was no question that we were the
No.1 firm," says Mack, who has promised investors that he will double the
company's pretax earnings, to at least $14
billion, by 2010. "This is not rocket science."
How did that work out? Or, did you mean to double the
debt or double the loses from stupid investments? Buying lottery tickets has
more science in it that this nostrum.
Some criticism from the competition:
“Some analysts, meanwhile, wonder whether
Morgan Stanley is equipped to ramp up the risky trading business so
aggressively. "You can't just throw a switch and make it happen,"
says Merrill Lynch financial-services analyst Guy Moszkowski. And there are worries
that Mack's embrace of risk might drive clients away.”
I thought Merrill Lynch went
down?
“A lot is riding on Mack's
turnaround strategy. If he fails to boost the stock, Morgan Stanley could end
up as one of the hunted instead of being a hunter. Some speculate that JPMorgan
Chase & Co. could try to reunite the House of Morgan by buying Morgan
Stanley.”
No, they picked over another carcass.
This is a
glimpse of the kind of ignorance and cavalier stewardship of investor’s money
that gave us the current depression on Wall Street. Now some guys from the same
club are on their knees at the White
House in front of the Marxist Nancy Pelosi asking the taxpayers to bail them
out.
Money for
Mack! Go Go Go!! Let us get into more risk! Profits will be enormous!
What do
we think now?
These guys deserve to
have their businesses chopped up and restructured.
rycK
Comments to: ryckki@gmail.com