Morgan Stanley CEO Mack Speaks on Credit Crisis at Company Meeting

While speaking to reporters before Morgan Stanley's annual meeting today, Chief Executive Officer John Mack said the credit crisis will last `"a couple of quarters'' longer as it spreads to commercial real estate, European lenders with sub-prime holdings and U.S. mid-sized banks. "It's going to be a difficult year for the Street,'' Mack said. 
 
He told shareholders at the meeting that the markets are facing the most difficult conditions he's seen in 40 years. 
 
The world's biggest banks and brokerages have reported more than $230 billion of losses and write-downs since the start of last year because of the collapse of the sub-prime mortgage market. Morgan Stanley, the second-biggest U.S. securities firm, said in a report earlier this month that turmoil in the credit markets may last an additional five to seven quarters, exceeding the Asia currency crisis and the bursting of the dot-com bubble. 
 
To weather the slowdown, New York-based Morgan Stanley will need to maintain "a lot of liquidity,'' Mack said, so the company is only ``gingerly'' investing in distressed assets. He said the U.S. sub-prime crisis may be almost over, though European companies holding such assets will take longer to recover. 
 

Published on April 8, 2008