John Mack, chief executive officer of top-ranked mergers adviser Morgan Stanley, said he welcomes the increased regulation by the Federal Reserve that came after the firm converted into a bank holding company as the financial crisis wiped out 87 percent of its market value.
"We have probably 15 to 20 Fed regulators in our building 24 hours a day," Mack said yesterday at the "Covering the Crisis" panel discussion hosted by Bloomberg News and Vanity Fair in New York. "They test our models. They question everything we do. I've never been regulated like that before. It's a different environment. Someone said to me, 'What do you think of it?' I love it."
The Fed became the firm's primary regulator when it approved Goldman Sachs Group Inc. and Morgan Stanley's applications to become bank holding companies in September 2008. The decision gave them access to funds from the central bank after credit seized up following the collapse of Lehman Brothers Holdings Inc.
Mack, who plans to continue as chairman of New York-based Morgan Stanley after stepping down as CEO at the end of this year, said regulators should have been more active before the crisis. Mack, 65, said he even reached out to regulators after turning down the chance to finance a highly leveraged deal during the credit boom.
"I missed a piece of business," Mack said he told the regulators. "I can live with that, but as soon as I hung up the phone someone else put up 10 times leverage. We cannot control ourselves. You have to step in and control the Street."
Mack, who was in the audience during the panel discussion, made the comments while answering a question about how he viewed media coverage of his firm during the crisis.
He said that while the majority of stories were fair, reports that Mitsubishi UFJ Financial Group Inc., which injected $9 billion into the firm last September, was close to backing out of the deal were "absolute B.S."