Morgan Stanley: Glass-Steagall Roots, Rick Rescorla and a $9 Billion Check

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Morgan Stanley exists because of the 1933 Glass-Steagall Act, which forced banks to choose between commercial and investment banking. J.P. Morgan & Co. kept commercial banking, and Henry Sturgis Morgan, J.P. Morgan's grandson, and Harold Stanley opened Morgan Stanley at 2 Wall Street on September 16, 1935. It took a 24 percent market share in its first year, with $1.1 billion in public offerings and private placements, and in 1938 led a $100 million debenture distribution for U.S. Steel. In 1962 Dick Fisher, later chairman, helped create the first viable computer model for financial analysis. In 1997 it merged with Dean Witter Discover, the retail business spun off from Sears, with Dean Witter's Philip Purcell as CEO and John Mack as COO.

On September 11, 2001, Morgan Stanley was the largest tenant of the World Trade Center; security director Rick Rescorla's evacuation plan got 2,687 employees out, and 13, including Rescorla, died. In 2005 former partners ousted Purcell, who had resisted subprime mortgages, and the firm moved into that market as it began to collapse. It took $5 billion from China Investment Corporation in December 2007, lost over 80 percent of its market value, became a bank holding company on September 22, 2008, and borrowed over $107 billion from the Fed. Over Columbus Day weekend, with U.S. wire systems shut, Japan's MUFG delivered a $9 billion investment as a paper check handed to Robert A. Kindler at Wachtell Lipton.

• Treasury Secretary Hank Paulson offered Morgan Stanley to JPMorgan Chase for free, and Jamie Dimon turned it down.
• Employee donations helped build the Morgan Stanley Children's Hospital at New York Presbyterian, opened in 2003.
• After 2008 it built wealth management through Smith Barney, the $13 billion E-Trade deal in 2020 and Eaton Vance, reaching $5.4 trillion in client assets.
• It paid $3.2 billion in 2016 over subprime mortgage bonds and agreed to a $249 million settlement in 2024 over block trade disclosures.
• Fines of over $41 million in 2022 and 2023 followed its failure to wipe decommissioned servers holding data on 15 million customers.