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There appears to be additional problems for the street's riskiest bank. I received this from a reader:

I have money tied up (frozen) in the primary fund.  I have been checking the daily position of the fund each day to make sure the investments in that fund are maturing and are turning back to cash.  Up and until today, every maturing investment was paid off.  However, a 1.3 billion repurchase agreement owed to the fund by morgan stanley was not paid back, it was rolled over to 10-8 from 10-3 and the coupon rate went to 5.5 from 1.45.  Any thoughts?


by the way, the reserve primary fund website to check these facts is

See the holdings statement which refer to this occurance here. The Reserve Fund's latest notice can be found on the site as well. Morgan Stanley's share price was severely punished today when the rumor spread that their Japanese funding source may pull out. Although the government gave the okay, over 25% will be bought by Mitsubushi bank over 25% underwater.  I find it hard to believe that the Asians are not tire of losing money in Wall Street investments. Think about it, would you be willing to invest at $25 per share with a market price of  $17 and change, a short ban about to be lifted, and a stock whose volatility and cost of capital is going through the roof. We can only assume they haven't spoke to the other Asian investors whose investment is deep sea diving right now. I welcome any and all comments from those that may have insight into the Morgan Stanley situation. 

Bloomberg: Morgan Stanley, Mitsubishi UFJ Say Deal Going Ahead (Update2) Oct. ... 

The Fed and other ``key global regulators'' have approved the agreement by Japan's largest bank last week to buy $3 billion of Morgan Stanley's common stock at $25.25 apiece and $6 billion of convertible preferred stock, Morgan Stanley said in a statement. The shares have closed below $25.25 every day since the agreement was reached.

``There's a rumor Mitsubishi may pull out,'' Fred Froewiss, vice president of institutional sales at RF Lafferty & Co. in New York, said earlier today. ``Maybe they're getting cold feet because of the freeze in the credit markets. The market is really trading on whispers and fear.''

Morgan Stanley dropped $5.85, or 25 percent, to $17.65 in New York Stock Exchange composite trading after falling as low as $14.13 earlier in the day.

Reggie Middleton:

The Riskiest Bank on the Street

(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)

Key highlights of my research on the "Riskiest Investment Bank on the Street": The Riskiest Bank on Wall Street – Morgan Stanley has US$74 billion of Level 3 assets, over 200% of its eq
Monday, 11 February 2008
A closer look at the exposure of the other brokers
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...- Who has the most of their assets tied up in illiquid Level 3 as a proportion to tangible equity? You guessed it, The Riskiest Bank on the Street. Now, they do have a decent amount of liquidity the ...
Sunday, 16 March 2008

19. On the insolvencies of non-bank financial institutions
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...Bullsh1+ part 1 Banks, Brokers, & Bullsh1+ part 2 Money Panic Bear Fight The Breaking of the Bear The Riskiest Bank on the Street Here comes the CRE Bust (Quip on Lehman Brothers)...
Tuesday, 18 March 2008

20. Quick Morgan Stanley update from my lab
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
  This is a refresher to the The Riskiest Bank on the Street piece that I posted a few months ago on Morgan Stanley. Let me get straight to the salient points. High exposure to lev
Thursday, 20 March 2008

22. Reggie Middleton on the Street's Riskiest Bank - Update
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
This is the update to my forensic deep dive analysis of Morgan Stanley. It is still, in my opinion, the "riskiest bank on the street". A few things to make note of as you browse through my opinion a
Sunday, 06 April 2008

23. Banks, Brokers & Bullsh1t 3.0: Shenanigans at Morgan and Lehman
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
I've been promising to give an illustration of the shenanigans being played by the commercial and investment bank's for some time now, but I've been quite busy working on my entrepeneurial pursuits
Wednesday, 16 April 2008

24. I warned you about the risk of those I Banks
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...ive counterparty and credit risk to imperfect hedges to dead and depreciating assets held off balance sheet: The Riskiest Bank on the Street Is this the Breaking of the Bear? Banks, Broke...
Wednesday, 21 May 2008