Chief Executive Officer James Gorman may be stepping down from his exalted position at Morgan Stanley when the year ends, but he remains one of the strongest voices in the North American financial sector.
Indeed, the outgoing CEO made a bold forecast on Friday, December 22nd, declaring that financial markets in the US and overseas will all take off in the coming year, provided that there is solid proof that the Federal Reserve has finally ended the aggressive rate hikes it implemented in the name of keeping inflation within manageable levels.
As Gorman puts it, banking and capital market deals in the past couple of years have been few and far between as rate increases have left most people askance as they had no idea how much financing would cost due to the almost weekly rate hikes. However, as soon as the Fed gives a strong indication that it’s done with raising interest rates, such deals will certainly be back on the table.
No One to Blame But Yourselves
Following the financial crisis of 2008, new regulations were set in place to make the US banking system safer for both bankers and the public. These regulations have since required banks to have more capital and to veer away or desist from riskier transactions. However, some banks have failed to comply – and Gorman bluntly opines that their imprudence eventually led to their failure.
This year, the roster of imprudent – and subsequently failed – banks includes three regional institutions: First Republic, Signature Bank, and Silicon Valley Bank. Their collapses which came one after another were seen as entirely their fault; Gorman also feels that they should have learned a lesson from the fall of Credit Suisse wherein faulty operational risk management proved to be the bank’s downfall.
