The Bush Administration has ignored domestic policy, especially economic policy for eight years. It only steps in when its rich investment banking buddies start to lose money on the regulation-skirting financial instruments that they themselves devised.
Its foreign policy, meanwhile, has been almost entirely rooted in revenge. It has propped up its short-sighted aims by making the masses feel that if the country didn't spend thousands of lives and billions of dollars to invade other countries, our country would be less secure.
Now the irony. (See below.) A Japanese bank is taking a big stake in troubled Morgan Stanley. You can only guess how many other flush foreign institutions (Japanese, Chinese, British, French, Saudi?) eventually will take stakes in these bedrock institutions of American free-market capitalism.
How is America more secure by allowing unfettered, unregulated markets to undermine the economy's foundation, leading to our assets being handed off to foreign institutions?
Count another Republican free-market victory. Their friends will get their money, die comfortably, pass their money along to their children and complain about taxes. The rest of us will be left a) holding the bag for the government bailout of bad business decisions, b) less market security and c) less of our own financial security.
Union Bank of California’s future parent, Mitsubishi UFJ Financial Group, said Monday it will take a stake in troubled investment bank Morgan Stanley for about $8.4 billion.
MUFG’s (NYSE: MTU) stake will range from 10 percent to 20 percent, based on Morgan Stanley’s book value and what the Japanese bank finds in its due diligence.
"This strategic alliance with Mitsubishi UFJ can put Morgan Stanley in an even stronger position as we look to realize the opportunities we see in the rapidly changing financial marketplace,” said John Mack, Morgan Stanley’s chairman and CEO.
MUFG’s buyout of the publicly held stake of San Francisco-based UnionBanCal (NYSE: UB) is pending. MUFG reportedly sees that transaction as the foundation for pursuing its ambition to be a significant player in American banking. Today’s plans to take a stake in Morgan Stanley moves MUFG further along that path.
Both Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) received approval over the weekend to become commercial banks. Monday’s MUFG-Morgan Stanley announcement follows a weekend of intense negotiations between Morgan Stanley and Wachovia, where a lot of closed door meetings at the Charlotte bank’s headquarters appears to have ended with Wachovia not taking on the risk of integrating a big investment bank like Morgan Stanley.
Wachovia’s (NYSE: WB) fate remains uncertain as the bank grapples with billions in troubled loans, many of them picked up in the company’s 2006 purchase of Oakland-based Golden West Financial. The bank acquired the parent of World Savings for about $25 billion. Today, Wachovia’s entire stock market cap is approximately $40 billion.