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:

On a conference call from a Morgan Stanley-sponsored financial services conference in London, the CFO said his firm cut its ABS CDO/subprime exposure to $1.8 billion from $10.4 billion, it cut CMBS exposure to $11.6 billion from $36.2 billion, and it cut other mortgage related exposure to $6.7 billion from $13.9 billion. Kelleher also said the the ongoing credit crisis will remain a serious problem “at least” through the end of 2008.

For those counting at home, Morgan Stanley took $24.3 billion in total mortgage exposure and made it into $8.5 billion — all within one quarter. Either someone was busy selling, or the accountants were busy remarking securities. Probably both. And I didn’t even mention the jaw-dropping cut in CMBS exposure. Morgan Stanley reported earnings of $1.55 billion for its fiscal first quarter earlier in March. Total write-downs for the quarter came in at $2.3 billion, including $1.2 billion in net MBS and related securities write-downs and another $1.1 billion in mark-to-market activity on loans. Disclosure: The author held no positions in MS when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.