In remarks that raised more than a few eyebrows among industry participants yesterday, Morgan Stanley CEO John Mack delivered something akin to a pep talk to reporters on the sidelines of the Wall Street bank’s annual meeting in New York. Via Reuters:

“If you look at the subprime problem in the U.S., you would say were in the eighth inning or maybe the top of the ninth,” of a nine-inning baseball game, Mack said. “Leveraged lending, as we know it, is in the ninth inning.” … Problems stemming from commercial mortgages are about half way through, said Mack, who added no one really knows how much more trouble will flow out of European debt markets. “We just don’t know. We don’t have enough information yet,” Mack said. “We keep getting disclosures that surprise us.”

It’s interesting to note, as well, that Mack indicated that while hedge funds, private equity and other investors are looking to swoop in on distressed assets in the mortgage market, Morgan Stanley itself isn’t likely to join in the fray — for now. The word “gingerly” was used by the company chairman to describe the firm’s approach to distressed debt. Not that such reticence should entirely be a surprise: earlier this month, CFO Colm Kelleher told investors that the Wall Street bank had pared its mortgage exposure back by 65 percent in the first quarter alone. All of which seemed to have left Mack feeling pretty good. “What we’re beginning to see is firms are looking at their positions and saying, ‘Hey, wait a minute. There’s more here than what we’ve said,’ and that’s very healthy,” Mack is quoted as saying in the Reuters story. As we’ve learned thus far, however, that sort of outlook for mark-to-market activity seems only to live as long as the lull between earnings seasons. Time will tell if Mack’s timed his remarks properly or not.