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Morgan Stanley is in pretty bad shape. Any company with exposure to sub-prime lending products could easily fail. Any company that is active in the credit-default swaps and collateralized-debt obligation markets is very exposed.


I think that's an overstatement. There's a winner and a loser in every derivative, it just happens to be the counterparties right now. Every bank has some type of real estate portfolio stress, but only 7 have failed this year. Compare that with 7,000 that failed in the early 1990s.

Dick Kovacevich rightly said that this was the first bank panic that has been caused by itself. Restrict lending practices (let's face it--not everyone deserves to live in a SFR), curb naked short-selling and allow more banks and investment managers to merge so they don't try and get into each other's panties.