Matt Taibbi has a vested interest in an incindiary view of the
world. (He's got a book for sale, after all).
Having said that, the John Mack saga at Morgan Stanley is
facinating. Morgan Stanley, the high powered investment bank,
merged in the mid 1990's with Dean Witter, a firm which had been
viewed as a low level seller of mutual funds (mostly their own with
excessive fees and pathetic performance) but which had a large
salesforce of stockbrokers. The idea was to create an instant
Merrill Lynch as in great investment banking + research effort (the
Morgan Stanley model) + sales force of 10,000 plus distrubution
force(Dean Witter).
The arrangement was that Phil Purcell, a McKinsey guy who was
conscripted to clean up the Dean Witter mutual fund mess, was
to run the combined firm for 5 years after which John Mack was to
take over in, what would that have been...circa 2001. 2001
arrived and Purcell said "hell no, I won't go. Mack left
taking most of the high powered MS bankers and research people with
him. The Tiabbi article alludes to the insider trading issues
that ensued before, with a standing ovation well reported by the
financial press, John Mack heroically returned to the Morgan
Stanley trading floor. So the concept then was that Morgan
Stanley was going to downplay retail brokerage, and allocate all
capital to the new and exciting Goldman Sachs credit default swap
model etc. And they went for it. Morgan Stanley was on
the ropes in October of 2008 because the balance sheet had been
leveraged to something like 35 to 1. Stock hit 6$ per share
down from $50 a year prior. If Mr. Tiabbi is correct
they then received a few billion dollars. Stock is back in the
$20's, thanks to the tax payers. Had the boring, visionless
Purcell been around it might not have necessary...
matt taibbi.....
matt taibbi on the real houswives of wall street
Posted by heiii on 13th of Apr 2011 at 02:38 am
Matt Taibbi has a vested interest in an incindiary view of the world. (He's got a book for sale, after all).
Having said that, the John Mack saga at Morgan Stanley is facinating. Morgan Stanley, the high powered investment bank, merged in the mid 1990's with Dean Witter, a firm which had been viewed as a low level seller of mutual funds (mostly their own with excessive fees and pathetic performance) but which had a large salesforce of stockbrokers. The idea was to create an instant Merrill Lynch as in great investment banking + research effort (the Morgan Stanley model) + sales force of 10,000 plus distrubution force(Dean Witter).
The arrangement was that Phil Purcell, a McKinsey guy who was conscripted to clean up the Dean Witter mutual fund mess, was to run the combined firm for 5 years after which John Mack was to take over in, what would that have been...circa 2001. 2001 arrived and Purcell said "hell no, I won't go. Mack left taking most of the high powered MS bankers and research people with him. The Tiabbi article alludes to the insider trading issues that ensued before, with a standing ovation well reported by the financial press, John Mack heroically returned to the Morgan Stanley trading floor. So the concept then was that Morgan Stanley was going to downplay retail brokerage, and allocate all capital to the new and exciting Goldman Sachs credit default swap model etc. And they went for it. Morgan Stanley was on the ropes in October of 2008 because the balance sheet had been leveraged to something like 35 to 1. Stock hit 6$ per share down from $50 a year prior. If Mr. Tiabbi is correct they then received a few billion dollars. Stock is back in the $20's, thanks to the tax payers. Had the boring, visionless Purcell been around it might not have necessary...
A booring M.S. retail broker
insider perspective
Posted by hazbin1 on 13th of Apr 2011 at 07:08 am
I understand it was a great ride for Dean Witter employees.