Citi analyst Prashant Bhatia thinks this is a distinct possibility. Herb Greenberg summarizes:
“The continued negative news flow about charges resulting from its mortgage & CDO exposure, an SEC inquiry, and continued deterioration in its financial condition, all increase the likelihood of significant client attrition… Management lowered its earnings guidance for the 5th time in 8 months and now management believes that it is no longer beneficial to provide earnings expectations for 2007.
The extent of poor risk management in our view, has put the viability of the franchise at risk.
No insight here except to say that, given the depths of the mortgage collapse, it would be startling if a major player didn’t go bankrupt.