US banks

Morgan Stanley’s board of directors approved, on 25th December, Christmas Day to many of us, the formation of a standing risk committee. Bizarre. After a pretty difficult time being long some of the wrong risks in 2008 and early 2009, Stanley has been slower than most to embrace the asset price rally of the second half of 2009. In the parlance Stanley have been whip-sawed, long when they should have been short and short when they should have been long. Is a standing risk committee the solution?

With John Mack focusing on the role of chairman, Morgan Stanley co-president James Gorman steps up to the CEO role. Is the formation of the standing risk committee linked to the personnel changes in the executive suite? To get to the top of a prestigious if somewhat tarnished organisation like Morgan Stanley you have got to be good. Competent, capable, smooth and good with clients.

But what Morgan Stanley really need is someone at the top who can improve their lamentable record managing market risk. Maybe Mr Gorman knows that a career in strategy and private banking is not the best preparation for that role, hence the standing risk committee. When we find out the balance of risk-taking hawks and risk-avoiding doves on the risk committee, we will have an important clue to what kind of organisation Stanley plans to become in the years ahead.

Related reading:

SEC filing by Morgan Stanley
Latest news on banks

Banquo is still an active investor so will declare his financial interest where appropriate in any blog post.

Banquo spent Thanksgiving in the US. Where else?

And the most popular Thanksgiving parlo(u)r game this year? “Have you bought a bank yet?”

With hundreds of banks and thrifts still sinking, the FDIC is going to stay busy in 2010. If you are of good standing and can scrape together an equity cheque (or “check” over there), the FDIC has banks and thrifts which could be yours by Christmas. Banks of all sizes in almost every state of the Union.

And don’t worry too much about those bad loans on the balance sheet, Sheila Bair, FDIC chairman, will take 80 per cent of the expected losses, rising to 95 per cent if losses are higher than expected. Prices are reduced for quick sale, which makes purchasing a bit like a lucky dip.

Little opportunity for you to prod and poke your potential purchase but with Sheila on hand to send you an early rebate cheque and wear (most of) the downside, no wonder everyone wants a bank in their stocking this holiday season.

Banquo is still an active investor so will declare his financial interest where appropriate in any blog post.


This blog is no longer updated but it remains open as an archive.

Banquo has spent more than 20 years in investment banking and the hedge fund industry, splitting his time between London, New York and Geneva.

Why is Banquo anonymous? Because he operates at a senior level across the financial markets, advising and investing, buying and selling, hiring and firing. He's still in the game but if he has a relevant financial interest in the subject of his posts, you'll know about it. Being anonymous keeps things simple. Banquo will never betray a confidence although he is privy to many.

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