UPDATE: Morgan Stanley CEO Sees Continued Credit-Market Woes
DOW JONES NEWSWIRES
April 8, 2008 10:25 a.m.
(updates with additional comments from Mack in fourth to sixth paragraphs)
By Jed Horowitz
Of DOW JONES NEWSWIRES
PURCHASE, N.Y. (Dow Jones)--Morgan Stanley (MS) Chairman and Chief Executive John Mack sees hard times in the credit markets continuing for another two to three quarters but said the subprime and leveraged loan problems in the U.S. are coming to an end.
The major problems forestalling a recovery, he told reporters before the bank's annual meeting Tuesday, are commercial real estate securities, subprime issues in Europe and credit problems at midsize banks in the U.S.
On the plus side, he said many investors are poised to start buying distressed assets. Morgan Stanley, however, will not participate in buying many distressed assets because it is focused on strengthening its balance sheet.
The recent turmoil, which led to the firm's first quarterly loss last year after writing down more than $9 billion of assets, is "unlike anything I've ever seen in my 40 years in the business," Mack told shareholders at the meeting. "The future is going to be challenging at Morgan Stanley and at all other firms on the Street."
He told reporters, however, that the U.S. subprime mortgage problem that spurred the credit crisis, is probably in the sixth or seventh inning of a nine-inning game.
Mack cited other signs of confidence returning to markets, including various efforts by the federal government to ease the housing problem for troubled borrowers and Washington Mutual Inc.'s (WM) deal to receive $7 billion in new capital from an investment group led by private equity firm TPG Inc.
-By Jed Horowitz, Dow Jones Newswires; 201-938-4047; jed.horowitz@dowjones.com
Morgan Stanley (MS) Chief Executive John Mack, using a baseball analogy, said the U.S. subprime crisis is in the "eighth or ninth inning" of a nine-inning game, while it is in the "sixth or seventh" inning in Europe. |
