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Friday, September 26, 2008

 

morgan stanley cash flight


they are trying through reorganization to get some cheap funding through deposits. but it just isn't that easy until they can outmaneuver others to hoover up deposits like jpmorgan chase did last night.

in the meantime -- cash flight from the prime brokerage will test their solvency.

Morgan Stanley lost close to a third of assets in its prime brokerage last week, amounting to hundreds of billions of dollars, as hedge funds fled after the collapse of Lehman Brothers and moved to rival banks.

The losses, confirmed by several people familiar with the business, will deal a big blow to Morgan Stanley as its prime brokerage is one of its most profitable and successful businesses.

... Many of the world’s biggest hedge funds moved their assets to commercial banks regarded as safer last week, as they and their investors worried that Morgan Stanley could follow Lehman into trouble.


a lot of those accounts will not be back. it's a lot safer to house with JPM or BAC at this point, regardless of who bails what.

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