The company [Morgan Stanley] said it lost $3.7 billion in the two months through Oct. 31 after prices for securities linked to home loans to risky borrowers sank further than the firm’s traders expected.
I love this part.
The people responsible for the losses no longer work at the firm, said Morgan Stanley spokeswoman Jeanmarie McFadden.
That seems wise… but late.
Chief Executive Officer John Mack oversaw an expansion of the firm’s mortgage business last year with the acquisition of Saxon Capital Inc. for $705 million in December. In addition to being a mortgage provider, Saxon services home loans to people with poor credit histories by collecting payments, maintaining records and foreclosing on delinquent borrowers.
The people at Saxon were bloody geniuses!
And reading between the lines that suggests the Morgan Stanley CEO may soon be playing a lot of golf with the recent former heads of Citigroup and Merrill Lynch.
Citigroup and Merrill Lynch both reported larger-than- expected losses on subprime-related securities such as collateralized debt obligations. Citigroup said Nov. 4 that its holdings lost as much as $11 billion of their value in October. Merrill Lynch on Oct. 24 reported the biggest loss in its 93- year history after taking $8.4 billion of writedowns, almost double the firm’s forecast three weeks earlier.