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Treasury Will Guarantee Mitsubishi's Investment In Morgan Stanley

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In what could set an important precedent, federal officials assured a big Japanese bank late Sunday that its planned investment in the embattled Wall Street giant Morgan Stanley would be protected, The New York Times's Andrew Ross Sorkin reported, citing people involved in the talks.

After two days of tense negotiations, Treasury officials urged a hesitant Mitsubishi UFJ Financial Group to proceed with its $9 billion investment in Morgan Stanley, which has sought the capital infusion to reassure investors and customers about its stability, The Times reported.

The deal is considered a crucial step in the government's strategy for revitalizing the financial system by luring outside investment while it considers buying stock in banks directly. The transaction's failure would deal a blow to that effort and potentially unnerve the financial markets.

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