The world wasn't buying that all was well with Morgan Stanley's deal with Mitsubishi UFJ Group, which called for the Japanese giant to inject $9 billion in the ailing investment bank. Even as Morgan Stanley insisted the deal would close this week, the stock kept on falling and CDS spreads soared. In what seems like a self-fulfilling prophecy, Mitsubishi UFJ, noting the market activity, has re-opened the deals, pressing for more favorable terms. This is not good, as some see the bank as precariously poised. The latest: The Treasury has stepped in to reassure Mitsubishi UFJ Group that if the Treasury is forced to invest in Morgan, it will not wipe out their investment, according to the New York Times. Exactly how it will do this is unclear. So, like other one-time independent investment bank peers, the stock and CDS markets are really forcing CEO John Mack's hand. The outcome of this one is far from clear. Of course, the markets abhor uncertainty.

For more:
- here's the New York Times article

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