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Morgan Stanley

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There Goes the Schneighborhood

Richard Gere has put his apartment in Julian Schnabel's Palazzo Chupi on the market, private-equity execs come down to earth, Sam Zell continues to be wacky, and Jeff Zucker and Harvey Weinstein fight like a couple of queens over 'Project Runway' in our daily roundup of real-estate, finance, media and law news.

New York Public Library Lions to Become Schwarzman's Kittens

FINANCE • As Blackstone's profit sinks 89 percent, Stephen Schwartzman gets the New York Public Library on Fifth Avenue and 42nd Street named after him. The naming rights came with a very generous $100 million donation, but we're not sure we're ready to go have lunch on the lovely steps of "Schwarzman." It'll feel like we're an undergrad at Penn or something. [NYT] • Wall Street says "There is a God" as its longtime persecutor, Eliot Spitzer, falls from grace. [NYT] • Lehman Brothers, the largest underwriter of U.S. mortgage bonds, plans to lay off 5 percent of its workforce, which is about 1,400 people. Meanwhile, Bear Sterns, the second-biggest underwriter of mortgage bonds, lost more than $1.3 billion in market value yesterday as investors worried about the firm's liquidity. [NYP, NYP]

Things Get Shakier For Morgan Stanley CEO John Mack

John Mack
When Morgan Stanley took a $9.4 billion write-down this past December, people were clamoring for chairman and CEO John Mack's head. "He's a chronic destroyer of value," a retired Morgan Stanley analyst said at the time. Surprisingly, he kept his job, even as the battered bodies of chief executives at other Wall Street firms that took major write-downs fell around him. But now CtW Investment Group, a shareholder activist group, is throwing its $1.4 trillion weight behind a campaign to persuade Morgan Stanley investors to withhold their votes for Mr. Mack, at least as chairman, and vote in an independent chairman. “The argument for John Mack stepping down as chairman is pretty strong right now,” William Patterson, the group's executive director, told the Times. “Everything we have seen suggests that this board is excessively protective of its C.E.O. The losses that Morgan Stanley took and the risk were unwarranted.” According to the Times, CtW isn't saying that Mack should leave the board or resign from his job as CEO, and their proposal isn't binding. Plus, the board is still behind Mack. “We are comfortable with John Mack’s role as both C.E.O. and chairman of Morgan Stanley," the board's spokesperson told the Times. Oh, no. They're comfortable with him? This is worse than we thought. The road to resignation is always paved with declarations of support. Morgan Stanley Chief Grappling With New Risk [NYT] Earlier: Morgan Stanley Loses $9.4 Bil; Mack Gets Knifed

Just in Time for ‘Times’ McCain Scuffle, ‘Time’ Editor Says Papers Shouldn't Endorse Candidates

MEDIA • What is the New York Police Department's policy for awarding press credentials? Journalists wonder the same thing. [NYT] • Time managing editor Rick Stengel ponders why newspapers endorse political candidates at a time when news consumers doubt the objectivity of the media. [Time] • Details of the deal that Newsweek struck with George W. Bush's former brain have emerged: It's a two-year, sixteen-column contract. [NYO]

Print Organizations Band Together, But Who Will Remain on the Island?

MEDIA • Print organizations make like Survivor: The New York Times, Hearst, Tribune, and Gannet form an alliance to back a new online company called quadrantONE. [USAT] • Star magazine makes no apologies for paying sources for scoops. In fact, "right underneath [Candace] Trunzo's editor's note in the current issue is an unbridled pitch with dollar signs around the edges." [NYP] • Bad blood is brewing between Barron's and CNBC after the publication ran a critical story about Mad Money's Jim Cramer. [CJR]

‘Us Weekly’: Keeping ‘OK!’ Honest

MEDIA • NBC golden boy Ben Silverman sells his production company, Reveille, to Rupert Murdoch's daughter, Elizabeth. [LAT] • CNN producer Chez Pazienza is forced to pack his bags after blogging for the Huffington Post. [TVNewser/Mediabistro] • Us Weekly reports that OK! magazine "sensationalized" Grey's Anatomy star Eric Dane's battle with cancer in a cover story. (Actually, he only had some malignant cells on his lip frozen off in a doctor's office.) "This isn't the first time OK! has been wrong," they note. But is Us really crusading against yellow journalism? Or are they just annoyed they didn't get the scoop? [Us Weekly]

Law & Order, ECU — FBI Probes Investment Banks With Its Unit

FBI Agent
Late yesterday afternoon, the FBI announced it was investigating fourteen banks for accounting fraud relating to subprime-mortgage loans. "There are some irregularities we are looking at," Neil Power, chief of the FBI's Economic Crimes Unit, told ABC News, adding that "good old-fashioned greed," likely played a part in the turmoil in the U.S. housing market, which has led to $135 billion in credit losses since last year. Power declined to say which companies were targets of the investigation but did say that they were "dealing with the people who securitize them and then the people who hold them, such as the investment banks." Coincidentally, Bear Stearns, Goldman Sachs and Morgan Stanley yesterday all separately disclosed that government investigators had asked them for information about their subprime activities. And they might as well add UBS to their list: The Swiss bank, which posted its fourth-quarter results this morning, announced it would be writing off $14 billion, all of it related to subprime mortgages. FBI Opens Subprime Inquiry [NYT] Feds Investigate Banks Over Subprime Lending [CNBC] FBI Wades Into Subprime Mess [ABC News] UBS Writes Off $14 Billion [NYT]

William Kristol Has the Gray Lady's Knickers in a Twist

MEDIA • Both Times public editor Clark Hoyt and former Times conservative standby William Safire have panned Arthur "Pinch" Sulzberger's decision to foist William Kristol on the editorial page. Among the other conservatives considered and passed over: Charles Krauthammer, Ross Douthat, Max Boot, and a bunch of other Weekly Standard stalwarts. But at least Judith Miller approves: "[I]t's an appointment that's a long time coming. The page needed balance.… [But] an unabashed neocon without remorse is unacceptable to Times people.… He's not kosher in that sense." [New Republic] • New York Observer president Robert Sommer nailed his MSNBC interview: "We like to view our readers as some of the smartest, most insensitive — most… Some of the most brightest readers in the country and especially New York." [NYO] • David Blum goes through his fifth sex columnist in little more than a year, firing his latest hire at the New York Press after she stole questions from Dan Savage. Some might call that slutty! [NYO]

Imus Sucker Punches Brokaw

MEDIA • Don Imus on Tom Brokaw: "He is not the most courageous person I've ever met in my life. He's not the guy I'd want to be in a foxhole with." You see, Brokaw didn't defend Imus when he was down-and-out because of the whole "nappy-headed-hos" incident. Resentment, now that takes courage! [NYP] • Shocker: CNBC is actually scared shitless of Fox Business News. They're now asking guests to choose sides, threatening to drop them if they dare to appear on Murdoch's new down-home network. [Silicon Alley Insider] • Veteran literary agent Lynn Nesbit wants a new publishing madman: "Even [former Simon & Schuster CEO] Dick Synder is a lot more colorful than [newly departed Simon & Schuster CEO] Jack Romanos, who is now gone. I mean, they had passion, they cared about literature. Even Dick, who's not an intellectual. He cared. He was a madman . . . . Who is a madman now in publishing? . . . It was just different then." Hi, Lynn, allow us to introduce you to our favorite publishing madwoman, Judith Regan. [Media Mob/NYO]

Let the Bear Blame Game Begin

FINANCE • Bear Stearns followed up yesterday's Morgan Stanley announcement with its own $850 million loss, again the first quarterly deficit in the bank's history. [DealBook/NYT] • Is former Bear Stearns exec Ralph Cioffi, the guy behind the two Bear funds that imploded this summer, the main culprit in the subprime crisis? New reporting suggests his team set off the plague of dirty debt that cost Citi and other top banks billions. Oh, and Cioffi's under investigation for pulling out a couple mil before anyone else got the chance. [Business Week] • What a mensch: David Rubenstein, the former lawyer turned Citadel private-equity master, decided to keep his new copy of the Magna Carta on display at the National Archives. Rubenstein paid $21.3 million — chump change for a guy worth around $2.5 billion. [Law Blog/WSJ]

Morgan Stanley Loses $9.4 Bil; Mack Gets Knifed

John Mack thought that by offing co-president Zoe Cruz last month, he himself might be spared the guillotine over Morgan Stanley's mortgage-related losses. But lo, it is not so easy. It's dark times out there on Wall Street; the cobblestones are stained with blood. And after Mack's announcement yesterday that Morgan Stanley would be taking a $9.4 billion write-down, the people are clamoring for a new sacrifice, and the writing is on the wall for John Mack. Also, it's in the papers. "He's a chronic destroyer of value," Kevin Murphy, a retired Morgan Stanley airline analyst who recently sold his stock, told the Wall Street Journal today. "He's a nice person, but you put this guy in the corner office and there's an x factor where he hurts himself."

Morgy Says, ‘I'm Too Old to Retire!’

LAW • Robert Morgenthau called a press conference in response to a "Page Six" item about him stepping down after 33 years: "I'm too old to retire." The man is 88! [NYT] • Big-time Mayer Brown partner Joseph Collins, who maintains offices in both New York and Chicago, has been indicted for fraud in the Refco case. [Above the Law] • Which court is the worst "judicial hellhole" in the country? [Law Blog/WSJ]

Cayne & Co. Will Not Bogart the Bonuses

Arden Wohl
Christmas is a time for giving, and lest we forget, it is also a time for sacrifice. This year, James Cayne and the other top executives at Bear Stearns are making the ultimate sacrifice: They've decided to forgo their year-end bonuses. Because they have enough money? Because they decided to donate it to the children of Darfur? Because J.C. hit it big at bridge? Eh, no. Ostensibly this decision has come about because they're gearing up to announce some pretty shameful fourth-quarter results tomorrow, and after losing $1.6 billion in investor money this year, pocketing what little is left would look kind of bad. So instead they're divvying up the small pool left over from what they didn't blow on subprime mortgages and giving it to players in the firm in hopes that they don't jump over to, say, Goldman Sachs. Bear Stearns Chiefs to Skip Bonuses [WSJ] Update: It's a trend! After announcing a $9.4 billion writedown, Morgan Stanley CEO John Mack is foregoing his bonus, too. Somewhere, Zoe Cruz is snickering.

Pandit and Willumstad to Share the Ultimate Power?

FINANCE • The newest Citigroup rumors suggest a "tag team at the top": Financial whiz Vikram Pandit will take over as CEO, while the more socially astute Robert Willumstad handles chairman duties. We're just not sure "tag team" means the same thing for us as it does the Times? [DealBook/NYT] • Morgan Stanley issued a full recession alert for the U.S. economy today in the oh-so-subtly titled "Recession Coming." Meanwhile, a recent Journal poll of top economists puts the risk of recession at 38 percent. [Telegraph, WSJ] • Thirtysomething Blackstone real-estate guru Jonathan Gray is getting rather comfortable in the top tier of the young establishment. [DealBook/NYT]

John Mack Gives Zoe Cruz the Heave-ho

FINANCE • John Mack decided to can Zoe Cruz just three weeks after naming her as a strong potential successor at Morgan Stanley. Two execs, Walid Chammah and James Gorman, will take Cruz's place as overseeing the firm's trading and risk operations. [NYT] • Eddie Lampert has lost quite a bit of his luster: The star investor sometimes mentioned as the heir to Warren Buffett lost millions on a big investment in Citigroup, and the earnings debacle at Sears is only making things worse. [Deal Journal/WSJ] • A small local council in Scotland managed to trump the Donald's $2 billion plan to build "the world's greatest golf course." It was just never clear on where Trump's hair would fit in the course. [NYP]

Kate Middleton Quits Fashion — Soon to Be Engaged?

FASHION • Princely girlfriend Kate Middleton quit her job at fashion chain Jigsaw, sparking rumors of an imminent engagement! [British Vogue] • Daria Werbowy is doing a line of makeup for Lancôme that benefits a Brazilian children’s charity. Hot and philanthropic? Sigh. [Fashionista] • Surprise, surprise: This holiday shopping season is gonna suck for retailers. [NYT]

The Bancroft Family High Jinks: Ongoing!

MEDIA • The Bancrofts are so dysfunctional that they missed the deadline for choosing their representative to the new Dow Jones board. Murdoch then vetoed two family nominations before agreeing to Natalie Bancroft, a 27-year-old opera singer and journalism neophyte. Family member Crawford Hill concluded: "This entire, sad and pathetic final episode is a fiasco. No wonder we lost Dow Jones!!" [WSJ] • With the Times hiring former sex writer Susan Dominus as the newest "Metro" columnist, will the section be heading toward the look of "Sunday Styles"? [NYO] • Nora Ephron: Blogging makes us better writers. Hey Nora, can you call our boss? [Mixed Media/Portfolio]

‘Times’ Laughs in Morgan Stanley's Face (Well, Back)

MEDIA • Marcus Brauchli remains top editor at the Journal, but there's a growing sense of inevitability that Robert Thomson, Sunday Times of London editor and Murdoch "old boy," will challenge him for the position. (Related question: Does Murdoch have any "boys" who are not "old"?) [NYO] • The Times' third-quarter earnings almost doubled analysts' expectations, giving the paper a chance to gloat about the big hit Morgan Stanley took a week ago by selling its stake in the company. [NYT, DealBook/NYT] • Rick Reilly, previously the highest-paid writer in the history of Time Inc., will get $2 million a year for five years at ESPN. Who knew wussifying sports would pay so well? [NYP]

Surprising No One, Rupert Murdoch Says Death of ‘Times’ Would Be ‘Nice’

MEDIA • Rupert Murdoch minces words: "When asked whether he was aiming to kill the New York Times, Mr. Murdoch replied simply: 'That would be nice.'" Meanwhile, isn't this a fun graphic in Murdoch's Post? [Guardian] • Murdoch may get a little help thanks to Morgan Stanley, who sold off their entire 7 percent stake in the Times. But one analyst says Morgan Stanley is the real loser, since the firm completely failed to change the Times' structure and took a big hit on the sale. [NYP, NYO] • n+1 continues its campaign to corrupt young minds, slipping pamphlets under the doors of unsuspecting Columbia freshmen. [NYS]