Morgan Stanley CFO Colm Kelleher has clearly been busy, as the New York-based bank said Tuesday that it has pulled back dramatically from mortgages during the first quarter.
Via Marketwatch:
Make that three in a row. After both Lehman Brothers and Goldman Sachs yesterday posted earnings that -- while still off relative to year-ago performance -- beat analyst expectations, Morgan Stanley provided the proverbial hat trick on Wednesday morning, soundly trumping forecasted earnings for the first quarter.
In the "not just residential mortgages department," Bloomberg reports that Morgan Stanley successfully sold the year's first CMBS deal. Only took roughly two months.
Morgan Stanley said Wednesday that it will lay off 1,000 employees in the U.S. and the UK as it moves to retrench its ailing residential mortgage business. Citing "continued deterioration in the mortgage markets," the firm said it will close its UK-based mortgage business, Advantage Home Loan, while it cuts back on its U.S. footprint as well.
I'd wanted to use the headline "Counterparty Party," but the Calculated Risk blog seems to already be on that wavelength ...
At any rate, banks and insurance regulators pow-wowed today in New York. The subject? What to do about the troubles now facing many large monoline bond insurers, whose woes run the risk of making the term "net of hedges" something of a joke at many of the nation's largest financial institutions.
At least some mortgage industry participants are finding a second life amid the wreckage of the subprime secondary market.
Morgan Stanley's hedge fund platform, FrontPoint Partners, has hired key executives and analysts from troubled scatch-and-dent mortgage operation C-BASS as it looks to launch a new fund that will focus on subprime and Alt-A residential mortgage investment opportunities.
A market bombshell from MBIA this morning is shaking up the mortgage finance market -- the world's largest financial guarantor said in a disclosure made available on its Web site late Wednesday that it has $30.6 billion in exposure to the collateralized debt obligation (CDO) market.
$8.1 billion of that total exposure is to more complex securities, a jaw-dropping 85 percent of which are CDOs squared -- think CDOs of CDOs.
Morgan Stanley on Wednesday said that it lost $3.6 billion during its fiscal fourth quarter ended November 30 -- the first quarterly loss in the investment bank's history. Driving the loss was the company's mortgage exposure, which drove a total fourth quarter writedown of $9.4 billion.
Reports by FBR Investment Management Inc. and Morgan Stanley said today that the mortgage meltdown appears likely to push the U.S. economy into a moderate recession during 2008.
American Banker's Kate Berry covers a report by FBR managing director Michael Youngblood:
"Non-agency mortgage credit performance is deteriorating more rapidly and more broadly than previously," he wrote.
As home builders struggle to keep their heads above water, it appears that at least one investment bank is sensing a buying opportunity: a Morgan Stanley unit entered into a joint venture with Lennar to acquire 11,000 homesites in 32 communities located throughout the country. Figures were not disclosed.
Lennar will retain 20 percent ownership interest and 50 percent voting rights in the investment venture, it said.
