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Don't expect a new rash of problems at other big brokerages in the wake of

Morgan Stanley's

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recent decision to freeze a chunk of home equity lines of credit.

Morgan Stanley notified thousands of clients this week of the freeze due to declining property values and the overall deterioration in the housing market, according to


, which cited a person familiar with the situation. Large banks, including

JPMorgan Chase

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Washington Mutual

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, among others, have already been notifying clients earlier this year of tightened lending standards and freezing credit lines on their home equity loans.

But while Morgan Stanley and

Merrill Lynch


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have forayed into mortgage and home equity lending during the housing boom to complement their large retail brokerage arms, rivals like

Goldman Sachs

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Lehman Brothers


generally cater to high-net-worth clients who have little need for such services.

"Lehman and Goldman don't do business with the vast majority of the people out there," says Richard Bove, an analyst at Ladenburg Thalmann. "So their exposure to things of this nature is substantially less. So I don't think it will be a problem for them."

Brad Hintz, an analyst at Sanford Bernstein, echoed Bove's thought. Goldman's and Lehman's client base is "all high-net-worth," Hintz says. "If a client really needs home equity loans they probably shouldn't be a client" at either firm, he adds.

Morgan Stanley will begin reviewing home equity lines on a monthly basis,


reported Wednesday.

"Consistent with the terms of the

home equity line of credit, Morgan Stanley periodically reassesses client property values and risk profiles," according to spokeswoman Christine Pollack. "A segment of clients was recently notified of a change in the status in their HELOC due to a change in the value of their property and or their credit profile."

Still, Morgan's home-equity exposure should be "modest," since it got into the business very late, Hintz adds. The company declined to comment regarding its current total outstanding home equity lines to clients.

Morgan's foray into the mortgage business is linked to the firm's management shake-up in 2005. Morgan's then new-CEO John Mack had expressed at the time the firm's need to take on more risk across the company. The firm hired former Merrill Lynch executive James Gorman in August 2005 as head of its global retail brokerage business. Hintz says one of Gorman's first moves was to ramp up its commercial banking activities, including mortgage and home equity loans for brokerage clients.

The firm also bought subprime mortgage lender Saxon Capital in 2006, at the end of the housing boom.

But like other investment firms that expanded into the residential mortgage business in the earlier part of the decade, Morgan Stanley has been paring back the business this year as the housing and credit markets deteriorated. In February it said it was scaling back its residential mortgage business by slashing jobs and closing its U.K. mortgage lender. Morgan Stanley still offers residential mortgage loans to clients through Morgan Stanley Credit Corp. -- a partnership between the Institutional Securities business and Global Wealth Management arm.

Merrill Lynch, which has been clobbered by the credit crisis as a result of its large exposure to collateralized debt obligations backed by risky mortgages, also is exposed to faltering consumer credit ventures. The firm has a commercial banking subsidiary Merrill Lynch Bank USA, based in Salt Lake City and also in 2006 bought subprime lender First Franklin from

National City


, which it announced it was winding down this spring.

Bove estimates Morgan's losses of "maybe hundreds of millions of dollars," as opposed to billions, he says.

"The bigger question is whether Morgan is going to have to do something like Merrill or what Lehman has to do," in terms of raising capital and/or selling troubled loans and securities at a discount, he says. "That would worry me more than what hit they take on home equity."

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