Knife Mack?

20 December 2007

2 minute read

Should John Mack be forgoing a little more than his bonus?

A quick rehash: Morgan Stanley's Q4 EPS loss of $3.61 was so far off consensus estimates of $0.39 as to make the firm almost unrecognizable from the one analysts thought they had under the microscope.

Write-downs are now $9.4bn, slightly higher than the latest revelations for Merrill, and on a par with those for Citigroup.

Mack's done the decent thing and relinquished his bonus while pointing the finger at "isolated losses in a small trading team".

But the case against Mack himself is compelling. After all, he:

· encouraged the firm to move further into the mortgage market (according to Financial News), after describing the bank as "under-represented" in the area back in 2005.

· pushed Morgan Stanley to move further into prop trading and (according to the Wall Street Journal) accused its trades of "losing their swagger".

· didn't keep a handle on risk and (again according to the Wall Street Journal) allowed the now deposed co-president Zoe Cruz to ride roughshod over "key decision makers involved in vetting mortgage trades" (AKA risk professionals).

Not everyone thinks it's Mack's fault. Chief financial officer Colm Kelleher expressed "total conviction" about Mack, who he also said was the man to lead MS out of its little "hiccup".

Mack-attack? Or Mack smack-on-the-hand-and-do-better-next-time? Let us know what you think.

AUTHORSarah Butcher

Global Editor

4 comments

Bo
Bob's your uncle
7 January 2008
It would help your case if you could spell.
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to
tom daly
27 December 2007
it's allways a sad time when things go wrong you know it's not all your fault there were others who were involved along the way but you have to take the final call and go,but just remember there are those of us out here who are ready to snap you up and take on to greater things and make all our lives richer.
Reply
Ma
Mach 2.0
22 December 2007
he should leave at the speed of light
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Da
Daggers after dark
20 December 2007
Mack should move back to whichever pe fund they pulled him out of of and they should both move on. His day has passed and it wasn't sunny. MS cut loose from Purcell, and now it needs to cut loose from the other protagonist in the pointless Dean Whitter escapade. There's no turning back the clock, and what was once a great organisation is starting to look more than a little shabby.
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