David Kirkpatrick

September 18, 2008

Possible merger for Washington Mutual and Morgan Stanley

I think that would be something like making an omelet with two rotten eggs.

From the link:

It wasn’t too many years ago that some federal regulators fretted about the dangers of letting commercial banks merge with the big investment houses on Wall Street. But in the current financial crisis, those mergers might be the only thing that saves some of Wall Street’s most storied firms, such as Morgan Stanley (MS) and a troubled lender like Washington Mutual (WM).

Update — the Wall Street Journal is reporting a possible deal between Morgan Stanley and Wachovia.

From the link:

A Wachovia deal would unite two large American financial companies and potentially placate investors who believe investment banks need to be joined with deposit-taking institutions. But Wachovia’s own mortgage exposure could be a sticking point in completing a deal, and some analysts have questioned whether Wachovia is the right partner for Morgan Stanley.

Morgan Stanley’s Mr. Mack appeared at the regularly scheduled quarterly town hall meeting at 8:30 a.m., speaking to a packed audience at the company’s Times Square headquarters. The CEO, joined by Chief Financial Officer Colm Kelleher and fellow co-presidents Walid Chammah and James Gorman said the company is exploring many options including the Chinese investment and a Wachovia tie-up.

Sounds like Morgan Stanley is really in deep. Parts of the article not excerpted covered potential deals with Citigroup and China Investment Group. Mack is in contact with the SEC and the White House to try and stop shorting of Morgan Stanley stock. I think we’re getting to a point where some these collapsing companies need to be allowed to crater.

Here’s another list of potential partners for the failing investment bank:

Morgan Stanley has other potential international and domestic partners, including HSBC Holdings PLC of the U.K., Banco Santander SA of Spain, Japan’s Nomura Holdings Inc. or Bank of New York Mellon Corp.