The CEO of Morgan Stanley comments on the Unfolding Banking crisis

The present healthcare crisis has had cascading consequences on the economy. The chief executive officer of one of the country’s major financial institutions has offered a few choice words on the effect this is beginning to have in the banking industry. Less than two decades ago the world was rocked by the financial catastrophe that was brought on by the financial sector of the US due to dangerous investment decisions by commercial banks. Will the next few months look like a slow-motion replay of 2008 or something else this time around?

Leading Statistics and Market Performance measurements in the Banking industry

There has been an effect on more than just one banking institution and in more than one economic activity. This is the most prevalent interruption that the system has seen since the Great Depression by some reports. At the beginning of the year, banks throughout the world were consistently setting records on quarterly earnings and yearly profits. Today numerous banks are beginning to question if there is a possibility they could lose solvency without government assistance.

Present Trading Activities are rather encouraging

This is the one bright spot in the market for banks right now. After some of the recent government intervention and the quantitative easing by the Federal Reserve, there has been a boost to the stock values. The only major problem here is there is still quite some distance to go up before they return to earlier highs.

Wealth Management Activities are not as promising as trading activities

Wealth management has come to be an significantly large part of many banking institution’s revenue sources over the last few decades. Morgan Stanley, for example, has reported roughly half of their yearly revenue comes from this division of their organization. This division also saw a decline of nearly 8% in the last quarter in this area.

14% fall in Investment Management activity is reason for concern

Today it is not exclusively the wealthy who invest. More and more people from all socioeconomic classes have been able to have access to investments. This has resulted in a significant share of the revenue stream for Morgan Stanley roughly one quarter what their wealth management generated for the company. This division fell by 14 percent in the last quarter as well.

More information is available at CNBC and The Business Insider.

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