Confidence among average investors is slowly returning after being severely damaged by the financial crisis and the "flash crash" earlier this year, James Gorman, CEO and president or Morgan Stanley, told CNBC Monday.
“Confidence is beginning to come back,” said Gorman, who appeared with Chairman John Mack and former chairman Parker Gilbert at the New York Stock Exchange to celebrate the firm's 75th annivesary. “It will take some time, but it’s beginning.”
For weeks after the flash crash on May 6, Gorman said Morgan Stanley experienced “some of the worst [market] activity we’ve seen since September 11. The good news is that clients did not take money out and put it in another asset class. They just held it back in cash and short-term fixed income. That is now starting to come back slowly into the market.”
Gorman added that banking world is in the “middle of a vortex” of changes, in light of the new Basel III rules and financial regulation in the US. He said that he supported the new rules because they give the markets certainty.
“It will make for stronger banks,” said Gorman, “so we’re comfortable with it.”
“Companies and governments need access to the capital markets, investors need investment choices, and asset managers need to prudently put that to work,” said the CEO.
Mack said that the bank won’t undergo any major restructuring due to the new regulations and that it will be analyzing exactly what those rules mean before taking any actions.