Big Mack Attack

by StockJockey

Wednesday, September 17, 2008 - 3:11 pm

Regulators and the powers that be are digging into their bag of tricks trying to keep us afloat-JPM apparently put out a note earlier pinning hopes for a rally on massive short covering as the new naked shorts rules go into effect.

John Mack at Morgan Stanley is also on the offensive, trying to circle the wagons and buy some time. He does not want to end up like Dick Fuld, and for good reason.

September 17, 2008
To: All Employees
From: John Mack

I know all of you are watching our stock price today, and so am I. After the strong earnings and $179 billion in liquidity we announced yesterday - which virtually every equity analyst highlighted in their notes this morning - there is no rational basis for the movements in our stock or credit default spreads.

What’s happening out there? It’s very clear to me - we’re in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down. You should know that the Management Committee and I are taking every step possible to stop this irresponsible action in the market.

We have talked to Secretary Paulson and the Treasury. We have talked to Chairman Cox and the SEC. We also are communicating aggressively with our long-term shareholders, our counterparties and our clients. I would encourage all of you to communicate with your clients as well - and make sure they know about our strong performance and strong capital position.

I’ll be hosting a town hall tomorrow morning at 8:30 a.m. EDT to address any questions that you have, and would encourage all of you to participate in that discussion. Viewing details are available on Morgan Stanley Today.

The stock is up at least 10% since the memo was made public, and seems to be helping for the moment.

But there is one long hour to go...Remarkable, isn’t it?
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Update: 4:40 PM The market forced Mack’s hand:

NY Times reports Morgan Stanley, one of the two last major American investment banks, is considering a merger with the Wachovia (WB) or another bank, according to people briefed on the discussions. Morgan Stanley’s chief executive, John J. Mack, received a telephone call on Wednesday from Wachovia expressing interest in the Wall Street bank. Morgan Stanley is considering other options as well. Other banks have also expressed interest in Morgan Stanley. The talks are preliminary and no deal may emerge.

Your move, Lloyd Blankfein.
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