Morgan Stanley Surges Following Blockbuster FICC Performance
Shares of Morgan Stanley surged on Thursday following a set of results that included a FICC number so good as to appear anomalous at first glance.
FICC sales and trading revenues somehow jumped 21% from a year ago to $1.43 billion, versus the $1.13 billion (i.e., a 5% decline) the street was looking for. To be sure, there was no shortage of drama in rates during the period, but that is a fairly remarkable beat, especially considering the bank's Q2 results reflected lackluster trading results. T
Meanwhile, as banks are able to take on new greater risk … FDIC isn’t happy, at least not yesterday:
Given the risks associated with the failure of large regional banks, these measures are unwarranted and misguided. They only increase the challenges posed by the resolution of these institutions and the potential for disorderly failure, and disregard the lessons of the financial crisis.
Conclusion
Thank you for the opportunity today to draw attention to the challenges posed by the failure of a large regional bank.
I have been increasingly concerned that the attention that has been given to the failure of Global Systemically Important Banks since the financial crisis, while entirely appropriate, may have obscured the risks associated with the failure of a large regional bank and permitted an unjustified sense of confidence to develop that the failure of such an institution would not be challenging. I believe the experience during the crisis of a large regional bank failure such as Washington Mutual, and even a smaller $30 billion institution failure such as IndyMac, illustrates the very real risks a regional bank failure would present.
Going forward, I believe that attention to this issue should be a top priority for the FDIC, for the other federal and state bank regulatory agencies, and for the banking industry.
https://www.fdic.gov/news/news/speeches/spoct1619.html