Morgan Stanley jumped into the subprime mortgage market in 2006.  Now, they are getting burned.

We recently met in New York with representatives from a number of their departments.  Their servicing staff was there for Saxon Mortgage.  Morgan Stanley purchased Saxon in 2006 for $704 million.  Saxon has been a “leading” subprime lender and servicer.

Morgan Stanley has already been hurt.  In November 2007, they wrote down $3.7 billion in U.S. subprime assets. At (more…)

Community Development Financial Institutions (CDFI) may be challenged by the riches in the near future. On Sept. 22nd, 2008, Goldman Sachs was converted to a bank holding company by the Federal Reserve.  Morgan Stanley has gone through the same process. The Federal Reserve’s intention was to be able to shore up the capitalization of these firms through its TARP program.

As banks, though, GS and MS are suddenly under the regulatory scope of the same forces that govern other banks.  This includes the examination under the Community Reinvestment Act.

These firms have undergone some scrutity for the CRA in the past.  They have each fared well.  Goldman Bank (more…)

Morgan Stanley‘s home mortgage lending vividly portrays the drop-off in lending after 2007.

You could say that it plummeted…as in like a lead weight.

Morgan Stanley has made loans through two financial institutions in the last two years.  Saxon Mortgage makes subprime loans.  Morgan Stanley Credit Corporation provides prime credit.  The two lenders could (more…)