As the wrenching shifts within the American financial industry shook world markets on Wednesday, Morgan Stanley, one of the two major Wall Street banks left standing, was considering a possible merger with the Wachovia Corporation or another bank, according to people briefed on the discussions.
A tie-up with a bank would restore Morgan Stanley to its structure during the Depression, when the firm split from the Morgan banking empire. It would also leave Goldman Sachs, long the envy of Wall Street, as the only major American investment bank left.
As Morgan Stanley’s share price came under renewed assault on Wednesday, the firm’s chief executive, John J. Mack, received a telephone call from Wachovia expressing interest in the Wall Street bank. Other banks have also expressed interest in Morgan Stanley, which is considering various options. The talks with Wachovia are preliminary and no deal may emerge.
Wachovia? Wachovia?!
I did Wachovia in several prior posts, but this is the standout one: Chronicles Of Depression 2.0: #168
A Morgan Stanley-Wachovia merger would be like two one-legged men hugging in order to try to walk with two legs!
More:
While Wall Street has gone through tough times before only to emerge bigger and stronger, some question whether the industry can rebound quickly after using high levels of leverage, or borrowed money, to binge on risky investments. Those investments have proved to be disastrous. Worldwide, financial companies have reported more than $500 billion in charges and losses stemming from the credit crisis — a figure some specialists say could eventually exceed $1 trillion.
One trillion. Which is now such a pathetically ridiculously small figure. It was revealed that Bear Stearns alone is holding thirteen trillion dollars in contracts.
Wall Street -- well, what's left of it -- doesn't think much of this possible merger:
Shares of Wachovia fell 20.76 percent, or 2.39 percent, to $9.12; Morgan Stanley declined 24.22 percent, or $6.95, to $21.75.
And they should know rotten deals when they see them -- they've done enough of them to be experts!
Don't breathe a sigh of relief when all these mergers are done deals by Friday.
There's next week and the week after that too!
And I'll state it again: This is The End. It will all fall.
All prior Chronicles of Depression 2.0 posts. Read them before you must.
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