Morgan Panic in Part Due to CEO Misquote

How quickly the business media forgets what they apparently should never have said -- much less so prominently -- in the first place.

Look. As readers and viewers know, The Business Press Maven has been shouting himself blue for well over a year, warning people away from financials because of the murky nature of their balance sheets. A bottom? Can't be declared amid murkiness has been my mantra. That said, beyond wholesale public panic unhinged from reality, I haven't fathomed a reason for the heedlessly plummeting stock prices of Goldman Sachs(GS Quote) and Morgan Stanley(MS Quote) this week.

Then came a front-page story yesterday that, considering, made my cerebral cortex feel as if it just got placed in a vise. The New York Times quoted John Mack, the CEO of Morgan Stanley, telling Vikram Pandit, the CEO of Citigroup, that all was lost if Morgan did not merge. "We need a merger partner," he supposedly said, "or we're not going to make it."

What a bazooka. Even if Morgan was seeking a merger for safety, did it really need one? Moreover, was it really dead without one? Above all, why oh why would Mack, no dummy, be dumb enough to say this? Admitting that you are a terminal case in this accelerated environment of doom does not give you even limited time to save yourself. It was not only a bazooka but one pointed by Morgan at its own head.

Well, loosen that vise. It turns out the realness of the quote fell out somewhere between Santa and the Easter Bunny, and the Times soon retracted it in the most serious way: through an Editor's Note. Its two sources for the quote weren't there to hear it directly, and the reporters hadn't even asked Morgan Stanley for comment.