December 19, 2007
Morgan Stanley Posts Loss, Borrows From ChinaDec. 19 (Bloomberg) -- Morgan Stanley wrote down its subprime-infected mortgage holdings by a greater-than-expected $9.4 billion and received a $5 billion cash infusion from state- controlled China Investment Corp.
Chief Executive Officer John Mack called the fourth-quarter loss of $3.56 billion, the first in the New York-based firm's history, "embarrassing.'' He'll forgo his bonus for the year, the company said today in a statement.
Mack's strategy of expanding in mortgages and making bigger trading bets backfired as losses from securities linked to home loans more than doubled in November. He ousted Co-President Zoe Cruz, who had overseen the fixed-income unit responsible for the mortgage trades, last month and promoted James Gorman and Walid Chammah, who previously ran wealth management and the New York- based firm's European operations.
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