Friday, September 11, 2009
In a surprise move, Morgan Stanley's CEO John Mack is stepping down. Mr. Mack leaves after four very rocky years at the helm of the formerly esteemed investment bank which almost bit the dust a few times in the last year. It seems like a lifetime ago that Mr. Mack was brought in to run MS by a few high profile investors who instigated a coup to oust the more conservative, former Dean Witter broker, Phil Purcell. Vikram Pandit famously walked off the trading floor to a round of applause and quit in protest, when Mr. Purcell promoted a woman (EGADS!) over him. Nobody should have to stay at their job after that sort of indignity. Mr. Mack was brought in to straighten up the place and keep all of those talented revenue producers from leaving. The firm ratcheted up its risk and went on to lose buckets of money in CDOs, CMBS, RMBS, you name it. Mr. Pandit started his own hedge fund that never made a dime but was bought by Citigroup anyway for $800 million at the peak. He now has the distinct pleasure of running the disaster that is Citi. And Morgan Stanley will now be run by a conservative former broker (they call it wealth management now.) This is what people mean when they call investment banking cyclical.