Morgan Stanley

  • 10 Jul 2012 at 12:16 PM

Layoffs Watch ’12: Morgan Stanley

The House of Gorman is said to be in the process of letting some employees down easy. Read more »

The role of the hero who has been in the belly of the beast and emerged to slay it seems to be psychologically rewarding,* because people keep trying to claim it for themselves. Like this Geoffrey Tomes gentleman, who bared his soul to tell DealBook that he “was selling JPMorgan funds that often had weak performance records, and I was doing it for no other reason than to enrich the firm.” You imagine him racing to tell DealBook about this revelation, imagining his welcome into the Greg Smith Hall of Heroes, and being a little disappointed that everyone was all “wait, what, did anyone on earth not know that was exactly what you were doing? Why did they think you were pushing JPMorgan products? That’s what banks do.”

Similarly there is a certain amount of “duh, obvs” to the recently unsealed documents in the lawsuit over the Cheyne SIV. But they’re still funny. Cheyne was a conduit stuffed with mortgages and home equity loans that exploded in the face of some people, who are now suing Morgan Stanley, who built it, and the rating agencies, who did sort of a not-so-great job of kicking its tires. From their filing unsealed yesterday: Read more »

  • 22 Jun 2012 at 10:03 AM
  • Banks

Moody’s Slightly Reduces Overrating Of Banks

Are we supposed to care about these downgrades? I like Glenn Schorr at Nomura, emphasis mine:

We think the net financial impact of these downgrades will be manageable as 1) potential collateral calls are small percentages of these firms’ liquidity pools; 2) counterparties have been preparing for this for some time and ratings downgrades have been an issue for the last 2+ years (there was little impact on Citi and BAC when they were downgraded back in September of 2011); 3) ratings are a relative game: given that Moody’s downgraded all capital markets firms, no single-firm is an outlier, so we don’t expect to see one company uniquely impacted. Yes, we get that counterparties looking to do long-dated derivatives might prefer a single-A rated entity, but as Basel III is implemented and more derivatives move to central clearinghouses, counterparty ratings should become less meaningful and clients will adapt (and not do all their business with JPM and GS).

It would be a serious misinterpretation of credit ratings to think of them as a global rank ordering of risks in the world. “A-rated things are of course safer than BBB-rated things,” you say, and get punched in the face repeatedly by life. A-rated things are not safer than BBB-rated things. A-rated RMBS CDOs were not safer than BBB-rated corporates, A-rated corporates are not safer than BBB-rated municipalities, and A-rated banks are it goes without saying not safer than BBB-rated software companies. Nobody really suggests otherwise – if they did, this graph would be a huge embarrassment to Moody’s: Read more »

Although the Morgan Stanley’s handling of the social media site’s disastrous stock offering is under scrutiny by just about every business news outlet under the sun, a Wall Street insider tells us the  investment banking’s corporate communications warriors are blaming CNBC for engaging in some pre-IPO hyping of their own. CNBC senior vice president and editor in chief Nik Deogun “is under fire,” says the source. “Morgan Stanley is telling him, ‘How dare you criticize us when you guys promoted this IPO worse than anybody.’ ” The source recalls examples of CNBC’s on-air exuberance in the days leading up to the IPO, including treating Facebook CEO Mark Zuckerberg ’s entrance at the kick-off of the company’s investors road show at the Sheraton hotel in midtown as if it were “the President’s State of the Union Address” with multiple cameras and reporters. Then on May 17, the day before the actual IPO, the hosts of CNBC’s “Fast Money” appeared on camera wearing hoodies — a reference to Zuckerberg’s favorite fashion item, which came off like an homage to the baby billionaire. That same day, controversial “Mad Money” host Jim Cramer told his viewers, who tend to be mom-and-pop investors and market-playing college students, “If you can get in on the actual IPO, then I think Facebook is a no-brainer.” He added: “We all know this one’s going to pop like crazy on its first day of trading, so if you can get in on the deal, I think you should try to get your hands on as many shares as possible.”…CNBC spokesman Brian Steel said: “CNBC’s Facebook coverage has been widely acknowledged as fair, balanced and insightful.” [NYDN, related, related]

Here is a detail from the Wall Street Journal’s article today about how Morgan Stanley tech banker Michael Grimes excluded the other underwriters from having much of an active role in managing and pricing the Facebook IPO and I cannot stand how good it is:

A page of his pitch book to other companies,* which he calls the “Driver/Navigator Model,” shows a black sports car. A company about to go public, the pitch reads, must choose between a “single driver [who] operates the steering wheel, gas, brake and clutch,” or the “two driver model, where the car literally has an extra steering wheel, gas, brake pedals and clutch for a second driver.” Morgan Stanley, the pitch says, “favors the sole bookrunner approach.”

Imagine being persuaded by that! You could construct a hierarchy of pitchbook pages based on how persuasive they’d be to a rational person; I’m the sort of person who tends to find tables of numbers most compelling, followed by charts (I know, I know), followed by functional diagrams of functional things (“we put the mortgages in this green box, and then sell them to this red box”), followed I guess by pages of texty bullet points, followed last of all by METAPHORICAL CLIP ART.** Read more »

In snaring the most coveted investment-banking assignment of the year, Morgan Stanley’s Michael Grimes insisted to a senior Facebook executive that he be the “single driver” of the company’s initial public offering, adding that if the deal soured, it would be his “throat to choke. [WSJ]

  • 12 Jun 2012 at 2:23 PM

Layoffs Watch ’12? Morgan Stanley?

James Gorman is approaching cost-cutting with the same focus as the Zodiac killer, so maybe. Read more »