The Wall Street Journalis reporting that major Wall Street firms
placed large bets against Morgan Stanley using credit-default
swaps, two days after Lehman Brothers sought bankruptcy
protection.
The firms included Merrill Lynch , Citigroup , Deutsche Bank and
UBS, according to the paper.
The paper said that a close examination of the trading revealed
that the swaps played a critical role in magnifying bearish
sentiment about Morgan Stanley.
A false rumor that Deutsche Bank had yanked a $25 billion credit
line to the firm helped trigger a cascade of bearish bets on Sept.
17 against Morgan Stanley , the paper said.
The Journal said that the account was pieced together from the
trading documents and more than six dozen interviews with Wall
Street executives, traders, brokers, hedge-fund managers,
regulators and investigators.
A UBS spokesman said that the bank does not comment on market
speculation or rumor, while a spokesman for Deutsche Bank also
declined to comment.
But apparently they are perfectly alright with spreading
rumors!
This confirms speculation that the same banks who fought so hard
for U.S. Securities and Exchange deregulation are now revealed as
institutions desperately eating each other alive as a result of
that same deregulation. Is it a comedy or a tragedy?