You just can’t make this stuff up. Don’t try and eat while you read this unless someone is standing by who knows the Heimlich maneuver : [Thanks L!]
WASHINGTON (AP) — The Treasury Department said Tuesday it had hired investment firm Morgan Stanley to help the government assess the risks facing mortgage giants Fannie Mae and Freddie Mac.
For $95,000 to cover the company’s expenses, Morgan Stanley will assess the state of the mortgage market and give the government a financial profile of the two firms. The two mortgage firms received a promise of support from the federal government as part of a sweeping housing rescue bill passed by Congress and signed into law by President Bush last week.
Treasury spokeswoman Brookly McLaughlin said the contract would help ensure the Treasury Department had good advice to decide how to support the two mortgage firms, which together own or guarantee half of all U.S. mortgages.
Hire Morgan Stanley to assess the state of the mortgage market? Remember this nugget of wisdom from Morgan Stanley last April?
Morgan Stanley CEO John Mack told investors that the collapse of the subprime market in the United States has reached its eighth inning or maybe the "top of the ninth."
How will Morgan Stanley assess risks if they can’t see them coming? There’s a reason Portfolio.com has Mack on their short list of "Least Trusted Wall Street CEOs".
I loved the assessment by the Monkey Business Blog. It quotes the Financial Times as saying: [no link]
"Morgan Stanley plans to use up to $1 billion saved from cutting 4,800 jobs this year to hire top-level executives and bolster its presence in areas such as derivatives, risk management and proprietary trading."
Then the post reminds us of a quote from Mack a year ago:
"Well, number one, I think this firm has the capacity to take a lot more risk than it has in the past. So from that aspect, we’re really using our talent in a more productive way than we have had in the past. I am comfortable with the risk…I think we probably have one of the best overall risk managers in Tom Daula, who oversees all firm risk, and also Zoe growing up on the sales and trading side, mainly trading side risk management, it’s a very strong combination. So I’m comfortable with it. Do we take a lot of risk? Yes."
-Morgan Stanley chief John Mack at the April 2007 shareholder meeting.
Monkey Business concludes:
