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More banks are expected to fail
Bill Condie18 Aug 2008
The financial crisis will probably not end until next year or even 2010, Morgan Stanley co-president Walid Chammah says.
Chammah, speaking in Germany, said he expects more banks to fail before the worst is over. "We will likely see more insolvencies among small US regional banks that have focused on mortgage business," he was reported as saying.
Return-on-equity rates of 25% were a thing of the past for the investment banking industry, he said. "I estimate returns in the industry will be more like 15% to 20% as a rule," he said.
His gloomy assessment came as speculation grows that Lehman Brothers faces a third-quarter loss.
Until now, analysts had been expecting the firm to move to a modest profit for the period.
Analysts told the Wall Street Journal that the bank's loss could be as high as $1.8 billion (£963.2 million) for the quarter.
