London, 8 p.m.:* Morgan Stanley CEO John Mack descended the staircase of his hotel and caught a glimpse of himself in the mirror. His shoes: shiny. His suit: expensive— but not too expensive. His eyebrows were carefully combed and held in place with their usual coat of clear mascara, and tonight, because the dinner with the Mitsubishi executives was so important, so vital, he also took the precaution of dabbing a small amount of concealer under his eyes to hide the dark circles. Because tonight of all nights, John Mack could not reveal stress. Looking in the mirror he saw, to his relief, that he did not look stressed. The face looking back at him was the same face he had lived with for 63 years, though, he thought ruefully, the man behind it was very different from the brash young bond trader he had once been, the one whose rallying cry was “There’s blood in the water, let’s go kill.” Now, it was his blood that was in the water.
The Federal Reserve had put him in an awfully awkward position when they made all that noise about speeding through Mitsubishi’s $9 billion purchase of 20 percent in the firm because of “unusual and exigent” market circumstances. It really made Morgan Stanley look kind of desperate, Mack thought angrily, which is probably why shares fell nearly 40 percent on Tuesday — anyone who read The Rules would have pulled out, knowing that you need to play a little harder to get than that or you’re going to scare off your suitor.
To be sure, by Thursday afternoon, Morgan Stanley’s shares had pulled back from their worst losses, and still closed at $12.45, due to assurances from the Japanese that they intended to do the honorable thing. But that was still a 25 percent drop! The firm had still lost 73 percent of its value this year! And thus, when the Treasury Department indicated they were going to begin the process of nationalizing banks today, and everyone looked around to see who would be first in line, of course there was Morgan Stanley, kicking its plump pink legs in the shark-infested waters!
The blogs were all over it: Felix Salmon at Portfolio pointed out that Morgan Stanley and AIG had similar balance sheets, and if $85 billion wasn’t enough for AIG, how would MS get by with nine? Then he twisted the knife: “Without the market’s trust, Morgan Stanley is nothing,” he wrote. “The market doesn’t trust Morgan Stanley. Therefore, Morgan Stanley is, well, toast.” Even the news services got into it: “There is continued unease about the prospects of the Mitsubishi deal going through,” one analyst told Reuters.
Well. Mack wasn’t going to get worked up about all of that now. This dinner was too important. He straightened himself up, breathed deeply the way he’d learned from yoga on TV. There was just one last thing left to do. Mack pulled his wallet out of his pocket, removed his credit card, and dialed the number on the back. He just needed to make sure there was enough cash in his account to pay for dinner. In pounds. “English,” he said, then got into the car, and disappeared into the night.
*This is from our imaginations.