Although he was putting on a firm show of confidence in his bank last fall, Morgan Stanley John Mack was privately worried.
Bloomberg describes the events last fall as the bank’s prime brokerage clients fled so quickly that they had to be restricted in withdrawals. But perhaps most interesting is the conversation between Mack and his wife.
The autumn attack on Morgan Stanley — with a run on the bank by hedge fund clients, a scramble to secure $9 billion from the Japanese and a 74 per cent plunge in the share price over four weeks — almost killed the company. Those weeks brought out in Mack what many who’ve worked with him say he does best: motivate the troops, attend to clients, cajole investors and draw on his government connections. What he didn’t reveal to employees were his doubts about whether the firm would survive.
“I said to my wife, when things were really crazy, ‘You know, there’s a chance I will lose this firm,'” Mack says in an interview in his 40th-floor midtown Manhattan office on a frigid January afternoon. “But I would rather be doing this than sitting on a beach reading a book.”
The SEC is investigating Wachovia CEO Bob Steel for expressing public confidence in his firm while worrying behind the scenes. So is the SEC now going to investigate John Mack, too?
If they’re being consistent, they should. (But, in reality, they shouldn’t. Of course John Mack was worried. He’d have to have been brain dead not to have been. And of course he didn’t say publicly that he was worried. That would have been a death-knell. If you’re going to allow CEOs to speak publicly, you have to allow them to put on a brave face when, inside, they’re scared. This is not deceptive. It’s part of the job.)
Business Insider Emails & Alerts
Site highlights each day to your inbox.