In spite of the many train wrecks in the financial sector, today's news from Morgan Stanley's fund management wing takes some beating. The revelation that someone in their real estate division was bribing Chinese officials is a clanger - particularly as this falls into the Foreign Crimes laws. That call to the DoJ must have been great fun!
Bankers have taken much of the limelight till now. Yet the press hasn't really talked about the catastrophe taking place in the large leveraged real estate funds (be it Morgan Stanley or others). Crazy gearing, lax property analysis and flaky deal makers - a toxic brew.
One can only hope that this crisis will finally sweep away these asset managers. They grew on the coat tails of an investment banking parent, fed by easy debt. Even if they didn't break the letter of their mandates, they've clearly broken the spirit behind them.
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