Morgan Stanley's John Mack Steps Down

Morgan Stanley Chief Executive John Mack will step down in a move that ends a four-year tenure marked by controversy over his strategic decisions and a near-death experience during last year’s financial crisis. Mack will stay on as chairman when he leaves the chief executive post in January, 2010. He will be replaced by James Gorman, the bank’s co-president in charge of global wealth management, investment management, and operations.

Mack has overseen Morgan Stanley during one of the toughest periods in the bank’s history. It slashed the assets on its balance sheet by almost a third to $677 billion in June in an attempt to cut its reliance on financial leverage. The firm’s average value-at-risk — a measure of how much the company estimates it might lose in a day’s trading — was $154 million in the second quarter compared to $245 million at rival Goldman Sachs.

Source: Financial Times, Bloomberg

Investors Stick with Equities

The last two years have tested people’s confidence in the stock markets. But despite most equities still well below their pre-credit crunch highs, investors have stuck with equities. Indeed, participation in 401(k) plans held steady in 2008, even as the average account lost 28% of its value, according to Hewitt Associates, which tracks retirement plans.

Source: New York Times

Chrysler Resumes Auto Leasing

Struggling U.S. automaker Chrysler is planning to resume auto leasing, according to a dealer briefed on the plans. That comes more than a year after the carmaker was forced out of the business — and three months after it emerged from bankruptcy. Chrysler will make a decision next week on the timing of the return, though new leases may not be offered until later in the month.

Source: Wall Street Journal

SEC Must Reform, or Else

The much-maligned U.S. Securities and Exchange Commission must “reform itself from within” or Congress will take over, according to Senator Richard Shelby. Speaking at a Senate Banking Committee hearing about improving the SEC’s performance, Shelby questioned whether the agency needs more resources to patch the flaws that allowed Bernard Madoff to embezzle cash for 16 years despite numerous tips and investigations.

Source: Financial Times

Obamacare Still Lacking Specifics

Despite U.S. President Barack Obama’s well-received speech on healthcare, administration officials still struggle to explain how he would achieve his goal of extending coverage to tens of millions of uninsured Americans without increasing the deficit. The White House has released few specifics on proposed legislation, including new taxes, changes in malpractice statutes, a new national high-risk insurance pool, and a commission on eliminating Medicare fraud.

Source: Washington Post

Oracle Has Customers Over a Barrel

After spending $30 billion to buy 56 companies, Oracle Chief Executive Lawrence J. Ellison has doubled the software giant’s revenues to an estimated $24 billion this fiscal year and sent the company’s stock surging. But the Oracle’s growing power, coupled with a surge in consolidation by other major players in the technology industry, has frustrated some corporate customers.

Source: BusinessWeek

Cadbury Investors Eye Big Pay Day

Many Cadbury investors support the logic of Kraft’s $16 billion bid for the British candy maker, but are holding out for an increased offer. The takeover bid has pushed Cadbury’s share price through the roof. Now, the British company’s price tag may reach $21.3 billion, according to the average estimate of six analysts surveyed by Bloomberg.

Source: Bloomberg

Harvard & Yale Endowments Lose $17.8 Billion

Harvard and Yale may be world-class institutions, but their investment strategies during the recession have been anything but stellar. The universities on Sept. 10 said their endowments — still higher education’s two largest — each lost 30% of their value in the year ending June 30, 2009. Combined, their investment pools shrank by a staggering $17.8 billion.

Source: Wall Street Journal

China’s Recovery Could Led to FX Diversification

Chinese strong industrial output and other bullish economic data in August surprised many analysts, and suggest the emerging giant’s recovery is on a solid course. Beijing, though, isn’t expected to hit the policy brakes anytime soon. The country’s fast-paced recovery also underlines why it makes sense for China to diversify its huge stockpile of foreign exchange reserves, according to David Dollar, the U.S. Treasury’s economic and financial emissary to China.

Source: Reuters