Photo: (AP Photo/Richard Drew)
Back in February, Moody’s warned that Morgan Stanley could face a massive three-notch downgrade. According to its own estimates, Morgan Stanley would have to put up additional collateral and make termination payments totaling up to $7.2 billion.Speaking at the U.S. Financials Conference in New York yesterday, CEO James Gorman was quoted saying that a three-notch downgrade would be “a somewhat stunning outcome.”
Will these prove to be the famous last words of James Gorman?
For Morgan Stanley’s sake, let’s hope that they don’t face a three-notch downgrade. But for everyone’s sake, let’s hope that they’re fully prepared and that they would not actually “stunned” should such a downgrade come.