Morgan Stanley on the Fannie, Freddie hot seat

We tend to think of Goldman Sachs as the firm with the most influence in Washington, given the many former execs that have ended up in high public service jobs. But when it comes to the big quagmire that Fannie Mae and Freddie Mac are stuck in, the firm with the most reputational capital on the line is now Morgan Stanley, which was the low bidder for the job. Breakingviews notes that John Mack has dispatched bankers Ruth Porat and Robert Scully to sort out the mess for former Goldman Sachs exec, now Treasury Secretary Henry Paulson. It will be up to them to propose a way to salvage the GSEs. But what if the two mortgage giants implode anyway? I doubt anyone will blame Morgan Stanley. That said, a brilliant plan would generate lots of goodwill.

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