Wednesday's Headlines: Morgan Stanley fights European exposure rumors

Morgan Stanley is struggling to reassure investors after rumors about its supposed exposure to faltering European banks sent its shares crashing, DealBook reports.

To fight the rumors, top Morgan Stanley bankers have been rallying workers and speaking with the firm's largest shareholders.

"It is a war that is being fought in large part in the shadows: against anonymous blogs and market whispers, but also against undefined fears about exposure to troubled European banks," DealBook writes. "While those worries are common to all the big Wall Street banks, Morgan Stanley, as the smallest, is perhaps the most vulnerable among them."

Other Headlines:

France and Belgium to restructure Dexia in second bailout on concerns about Greek exposure. [Wall Street Journal]

U.S. government wins tax shelter lawsuits against Wells Fargo, Citibank, KPMG. [Reuters]

CFTC wants tighter oversight of "cheetah" high-frequency traders. [DealBook]

Bank of New York sued by U.S. DOJ, NY AG for alleged fraud in forex deals. [Financial Times]

Eurozone bank deposits at ECB hit new 2011 record as debt crisis deepens. [Wall Street Journal]

EU finance ministers discuss bank rescue plan to avert larger crisis. [Financial Times]

Italy's Intesa Sanpaolo chairman says bank has liquidity, denies rumors. [Dow Jones Newswires]

Bridgewater outsources back-office, paychecks to Bank of New York Mellon. [Greenwich Time]

Bank of America may see fraud claims on Countrywide faulty borrower data, U.S. audit says. [Bloomberg]

Wall Street demonstrators sue NYPD over mass arrests; protests continue. [Bloomberg]

Merrill Lynch renames institutional advisory business, hires new team. [On Wall Street]

Hedge funds' third quarter worst since 2008, fourth quarter will be tough too. [Reuters]