Financial Markets

Inside the Bunker: CEO John Mack on Saving Morgan Stanley

Published : October 14, 2009 in Knowledge@Wharton

During the depths of the global financial meltdown in September 2008, John

Mack faced the most critical moment of his tenure as CEO of Morgan Stanley.

The investment bank was nearly out of cash, its stock price plunging into the

single digits as investors lost all confidence in the financial sector. Mack was

under enormous pressure from U.S. Treasury Secretary Timothy Geithner –

who was then head of the New York Federal Reserve Bank — and from

Geithner’s higher-ups, then-Treasury Secretary Henry Paulson and Fed

chairman Ben Bernanke. Their suggestion: Save the bank by merging with

another player, most likely JPMorgan Chase & Co., for a price as low as a

dollar.

During the depths of the global financial meltdown in September 2008, John Mack faced the most critical moment of his tenure as CEO of Morgan Stanley. The investment bank was nearly out of cash, its stock price plunging into the single digits as investors lost all confidence in the financial sector. Mack was under enormous pressure from U.S. Treasury Secretary Timothy Geithner — who was then head of the New York Federal Reserve Bank — and from Geithner’s higher-ups, then-Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke. Their suggestion: Save the bank by merging with another player, most likely JPMorgan Chase & Co., for a price as low as a dollar.