US trio act on Morgan and Goldman transformations
A trio of elite US firms have taken the lead roles on the transformation of Morgan Stanley and Goldman Sachs into bank holding companies, reports The American Lawyer. Cravath Swaine & Moore, Sullivan & Cromwell, and Wachtell Lipton Rosen & Katz. played key advisory roles on the groundbreaking deals, and the same three firms also advised Morgan Stanley and Japan's Mitsubishi UFJ Financial Group in a deal under which Mitsubishi, known as MUFG, will purchase up to 20% of Morgan Stanley's common stock. The bank holding deal is the most momentous in terms of Wall Street history. In return for access to deposits and the Federal Reserve's lending facilities, Morgan Stanley and Goldman will now be subject to the tight federal regulations that will hamstring their ability to take billion-dollar risks. The Federal Reserve can demand more public disclosure and limit the level of debt the banks can take on in relation to their capital reserves.
September 23, 2008 at 11:18 AM
2 minute read
A trio of elite US firms have taken the lead roles on the transformation of Morgan Stanley and Goldman Sachs into bank holding companies, reports The American Lawyer.
Cravath Swaine & Moore, Sullivan & Cromwell, and Wachtell Lipton Rosen & Katz. played key advisory roles on the groundbreaking deals, and the same three firms also advised Morgan Stanley and Japan's Mitsubishi UFJ Financial Group in a deal under which Mitsubishi, known as MUFG, will purchase up to 20% of Morgan Stanley's common stock.
The bank holding deal is the most momentous in terms of Wall Street history. In return for access to deposits and the Federal Reserve's lending facilities, Morgan Stanley and Goldman will now be subject to the tight federal regulations that will hamstring their ability to take billion-dollar risks. The Federal Reserve can demand more public disclosure and limit the level of debt the banks can take on in relation to their capital reserves.
Wachtell represented Morgan Stanley in arranging the deal with the US Government, and Cravath advised Morgan's board of directors, according to Erik Tavzel, a Cravath partner on the deal. The Cravath team also included partners Faiza Saeed and Frank Barron.
Sullivan & Cromwell represented Goldman in crafting the same arrangement with the Federal Reserve, with Rodgin Cohen leading the team.
The three firms have been everywhere as some of the nation's modern economic giants have fallen apart in the last few weeks. Wachtell partners Harold Novikoff and Edward Herlihy advised the Treasury Department in its then unprecedented takeover of Freddie Mac and Fannie Mae, and both Wachtell and Cravath were involved in Bank of America's decision to throw a $50bn (£27bn) life raft to Merrill Lynch. Wachtell advised Bank of America, and Cravath advised Merrill's board of directors in that deal; a team from Shearman & Sterling represented Merrill.
Cohen, meanwhile, was named The Am Law Daily's first ever Dealmaker of the Week last week for his role advising Lehman Brothers before the bank filed for Chapter 11 protection, and for advising AIG on its $85bn (£45.9bn) government bailout.
On the Morgan-Mitsubishi stock deal, Wachtell advised Morgan Stanley, Cravath acted for the board of directors, and Sullivan represented MUFG.
The American Lawyer is a US sister title of Legal Week.
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