NEW YORK (TheStreet) -- Goldman Sachs(GS) - Get Report, Morgan Stanley(MS) - Get Report, Jefferies & Co.(JEF) - Get Report and Barclays(BCS) - Get Report could all suffer the same fate as MF Global (MFGLQ.PK) , according to "tweets" by Nouriel Roubini, the bearish economist and New York University professor who gained fame as one of a small number of experts credited with predicting the 2008 financial crisis.
"What happened to MF Global could happen to Jefferies, Barclays, Goldman Sachs & Morgan Stanley.Leverage & maturity mismatch can lead to runs," Roubini wrote using the abbreviations and misspellings typical of
Monday morning. He had no immediate response to an email message or a phone call, and spokespersons for Morgan Stanley and Goldman declined to comment. Email messages to spokespersons at Jefferies and Barclays produced no immediate response.
MF Global filed for bankruptcy last week just days after a ratings downgrade sparked by the company's disclosure that it had more than $6 billion in exposure to European debt. Though the company's positions had not fallen significantly in value, its disclosure sparked a crisis of confidence in MF Global, which saw its shares lose 66% over four days leading up to its bankruptcy filing.
Morgan Stanley and Goldman Sachs, along with other large securities dealers like Lehman Brothers, Merrill Lynch, and Bear Stearns, all saw their shares plunge drastically in 2008 on investor concerns that they did not have sufficient access to cash to keep their doors open in a crisis. While Morgan Stanley and Goldman have since registered as bank holding companies and beefed up their balance sheets, Roubini argued Monday that those efforts were not sufficient.
"Broker dealers still very levered a lil less than before, & have a huge maturity mismatch: so a large loss reduces capital & leads to a run," Roubini tweeted.
Roubini argued in another tweet that
Bank of America
are "less at risk to a run only because insured deposits of retail bank subsidize the BK
presumably the brokerage unit. Huge moral hazard unsolved." Spokespeople for those banks had no immediate response.
Roubini wrote other tweets Monday morning voicing his concern about the fragility of the banking system, a view that contradicts that of many industry analysts and CEOs who say large financial institutions have done more than enough to shore up their balance sheets in the wake of the 2008 crisis.
Reacting to comments by Citigroup chief Vikram
conference in New York Monday, Roubini wrote: "Selfserving nonsense of the day:Pandit sayin that markets will see riskier banks & impose discipline so no need for capital surcharge." Citigroup also had no immediate response.
-- Written by Dan Freed in New York
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