$107 Billion Under The Table

I wrote a while back about Morgan Stanley taking the rains as the world's top investment bank. In prepping the topic, I went back and looked over how much TARP money they and the other bulge brackets received during the bailout. Most easily available sources placed the number around $10 billion. New information has recently emerged which places the actual figure at closer to $107 billion.

Acting on a Freedom of Information Act request, the government has recently released nearly 30,000 pages of information relating to transactions taking place throughout September of 2008. The following graphic is a stark reminder of how much the whole affair was a game of Three Card. As many (myself included) would dub Citi and BofA "nationalized banks", Morgan Stanley actually functioned as the extended arm of the Federal Reserve throughout the peak of the crisis. Funny how that reality somehow got lost in the shuffle.

It shouldn't come as much of a shock that Morgan has emerged from the crisis in the manner of Lazarus. What should come as a shock is how blind of an eye we have all turned to these events. A look under the hood of Morgan's prime-brokerage business doesn't reveal much as to how much/if at all their liquidity balances are self regulated three years after events which led to various hedge funds pulling ~$130 billion out of the bank in a few solitary weeks.

With the risk of another recession looming and the smell of panic returning to the air, I am curious to hear if any of you guys think the risk environment and profiles of some of the TARP recipient banks have really changed all that much?

I am not trying to bring up panic or point fingers. I do, however, find it pretty much amazing that Morgan has been able to so casually side step the spotlight over the past few years. It gets my scalp itching for my good ol' tin foil hat and wondering how such a steamy turd has managed to chill out under the rug, while the rest of the industry burned and continues to tingle from the funk...