Morgan Stanley Stuns With $9.4B in Writedowns

CEO gives up bonus in face of terrible performance

By Kevin Spak, Newser Staff

Posted Dec 19, 2007 8:10 AM CST

(Newser) – Morgan Stanley, the nation's second-largest investment bank, lost $3.59 billion this quarter, its first loss ever, after taking a whopping $9.4 billion in writedowns on mortgage-backed securities. CEO John Mack, who promised to give up his 2007 bonus as penance for the losses, also announced a $5-billion cash infusion from China Investment Corp., the investment arm of the Chinese government, for a stake of 9.9% of the company.

The writedown knocked Morgan Stanley revenues to negative $450 million—analysts had expected a positive $4.23 billion. “This quarter is deeply disappointing,” said Mack, promising to right the ship and calling the writedowns “isolated losses by a small trading team.” But not everyone was persuaded: “It’s going to get worse before it gets better,” said one investor.

The Morgan Stanley building is shown in this June 19, 2007 file photo in New York. (AP Photo/Mark Lennihan, file) (Associated Press)

John Mack, CEO of Morgan Stanley, attends the Committee of 100 Conference in this file photo from April 20, 2007 in New York. Mack said he would give up his 2007 bonus because of the firm's dismal fourth... (Associated Press)

A sign on Morgan Stanley's headquarters is shown Monday, April 16, 2007 in New York. (AP Photo/Mark Lennihan) (Associated Press)

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Morgan Stanley Stuns With $9.4B in Writedowns

CEO gives up bonus in face of terrible performance

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They're near deal to settle allegations on mortgage-bond deals

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Morgan Stanley Stuns With $9.4B in Writedowns

CEO gives up bonus in face of terrible performance

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OTHER STORIES ON OUR RADAR

subprime mortgages • Morgan Stanley • earnings reports • John Mack • mortgage backed securities • writedowns

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Morgan Stanley CEO Feels Heat

After 'embarassing' quarter, Mack could lose his swagger— and his job

Bear Stearns Posts First Loss

Subprime writedowns hobble 'bond shop,' loss almost four times what analysts expected

Morgan Stanley 2nd Quarter Wallops Rivals

Profits spike 40% as subprime slump smacks rest of sector

Banks to Pay SEC for Financial Crisis Fraud

They're near deal to settle allegations on mortgage-bond deals

Morgan Stanley Boss: Bankers Are Overpaid

But that's not going to change unless Washington steps in

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