The bank's draws from the Fed began to ebb after Sept. 29, 2008, when the firm announced an agreement for Tokyo-based Mitsubishi UFJ Financial Group Inc. to invest $9 billion in Morgan Stanley for a 21 percent equity stake.
"This $9 billion investment will further bolster Morgan Stanley's strong capital and liquidity positions," the firm said in a press release that day.
Colm Kelleher, 54, Morgan Stanley's chief financial officer at the time, disclosed on Dec. 18, 2008, that the firm's prime- brokerage balances had tumbled 46 percent to about $150 billion as of Nov. 30 from $280 billion on Aug. 31. On a conference call that day, Kelleher said the erosion was "clearly a function of the downsizing of the hedge-fund business."
'Safer Place'
While many hedge funds have since returned to Morgan Stanley, the firm doesn't provide detailed updates on its prime- brokerage balances.
"Prime-brokerage revenues were up significantly" over the previous quarter, while client balances "continued to grow modestly," Ruth Porat, 53, who replaced Kelleher as CFO, said on a call with investors on July 21, without disclosing amounts.
Morgan Stanley's liquidity stood at $182 billion as of June 30 and represents 22 percent of total assets, up from 18 percent just before the crisis.
"Nobody could withstand a run on liquidity, except, of course, the government," Morgan Stanley CEO James Gorman, 53, said in a May 24 speech in New York. "Hopefully we're in a much safer place as a result of it."
In a brief interview afterward, Gorman declined to comment on what changes the firm had made in its prime brokerage.
"We give out as much as we feel is appropriate on that business," he said.
A new rule adopted in December by the Basel Committee on Banking Supervision, an international panel of regulators, requires global banks to keep enough cash or cash-like reserves on hand to survive a 25 percent run-off of balances in "clearing, custody or cash-management" accounts during a crisis lasting 30 days. The rule doesn't take effect until 2015.
'Almost Impossible'
While Morgan Stanley's liquidity has increased, "it's almost impossible" to judge whether it's enough, Hintz said.