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SEC Response Letter

 1585 Broadway

 New York, New York
10036

CONFIDENTIAL TREATMENT OF CERTAIN DESIGNATED PORTIONS OF THIS LETTER HAS BEEN REQUESTED BY MORGAN STANLEY. SUCH CONFIDENTIAL PORTIONS HAVE BEEN OMITTED, AS INDICATED BY [*] IN THE
TEXT, AND SUBMITTED TO THE COMMISSION.

 November 27, 2007

 By U.S. Mail & Facsimile to 202-772-9368

 Mr. John Hartz

 Senior Assistant Chief Accountant

 Division of Corporation Finance

 Securities and Exchange Commission

 100 F Street, N.E.

 Mail Stop 4561

 Washington, DC 20549

Re:

Form 10-K for the Fiscal Year Ended November 30, 2006

Form 10-Q for the Fiscal Quarter Ended February 28, 2007

File No. 001-11758

 Dear Mr. Hartz:

 Morgan Stanley (the “Company”) is pleased to respond to your letter of August 30, 2007, concerning its Annual Report on Form 10-K for the fiscal year ended November 30, 2006 (“Form 10-K”) and Quarterly Report
on Form 10-Q for the fiscal quarter ended February 28, 2007 (“Form 10-Q”). For your convenience, we have restated your comments below.

 As
you are aware, recent events in the subprime market segment have impacted the Company. As a result of these recent market events, the Company filed two Current Reports on Form 8-K during the month of November 2007 related to its subprime positions.
Accordingly, the Company has responded to this request by providing the data included in those Form 8-K filings, which is as of October 31, 2007, as that is the most recent data that is readily available for certain of the information
requested. However, for certain other data, information is provided as of August 31, 2007, as that is the most recent date for which information is readily available at the level of disaggregation requested.

 In addition, we note that the Company has quantified the carrying values and/or net exposures related to its positions in subprime related securities, derivatives, and
whole

loans as of October 31, 2007. Given the dynamic and evolving nature of market conditions, it is likely that the amounts quantified as of
October 31, 2007 have changed in the intervening period. Additionally, the Company will consider supplemental disclosures in the preparation of its Annual Report on Form 10-K for the fiscal year ended November 30, 2007 given recent market
events.

 Finally, the Company would like to preface its response by noting that Saxon Capital, Inc. (“Saxon”) was acquired on December 4,
2006. Accordingly, the data provided in this response for periods prior to December 4, 2006 excludes balances related to Saxon.

 Form 10-K for
the year ended November 30, 2006

 Note 4. Collateralized and Securitization Transactions, page 126

1.
We note from the disclosures on page 4, 127 and 162 that you originate, trade, make markets and take proprietary positions in, and act as principal with respect to, mortgage
related and real estate loan products. We further note on page 4 that in December 2006 you acquired Saxon Capital, Inc., a servicer and originator of subprime residential mortgage loans. We also note that you provide financing to customers for
residential real estate loan products. It is unclear from your document the exposure you have to subprime loans.

 Although there may be differing definitions of subprime residential mortgage loans, they are sometimes recognized to be loans that have one or more of the following features:

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A rate above prime to borrowers who do not qualify for prime rate loans;

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Borrowers with low credit ratings (FICO scores);

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Interest-only or negative amortizing loans;

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Unconventionally high initial loan-to-value ratios;

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Low initial payments based on a fixed introductory rate that expires after a short initial period then adjusts to a variable index rate plus a margin for the remaining term of
the loan;

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Borrowers with less than conventional documentation of their income and/or net assets;

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Very high or no limits on how much the payment amount or the interest rate may increase at reset periods, potentially causing a substantial increase in the monthly payment
amount, and/or;

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Including substantial prepayment penalties and/or prepayment penalties that extend beyond the initial interest rate adjustment period.

 Based on your current public disclosures, it is possible that more clarity about your exposure to any subprime loans could be helpful. Regardless of
the materiality of your exposure, we respectfully request that you provide us with the supplemental information about your involvement in subprime loans.

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 Preface your response by how you specifically define your subprime loans in practice, if at all.
However, we ask that you consider the above definition, in general, as part of your response. In other words, we request that the information you provide be based, more or less, on the above definition. Where it does not, please provide specific
guidance. This request may be hard for you to provide on a timely basis. Please consider alternative information that may address the concern, at least in part, but which can be readily provided.

 Response A:

 The Company’s exposure to subprime activity is
almost entirely concentrated in the United States, through direct relationships with borrowers or otherwise. Therefore, the responses included herein are focused on the Company’s U.S. subprime exposure, whether that exposure is held by U.S. or
non-U.S. subsidiaries.

 The Company has adopted and implemented the Interagency Guidance on Subprime Lending as well as the Fannie Mae and Freddie Mac
(FNMA and FHLMC are collectively referred to as Government Sponsored Entities, or “GSEs”) Statements on Subprime Lending and Responsible Lending (collectively the “Subprime Guidance”). The Subprime Guidance generally defines a
subprime mortgage as a real property secured loan made to a borrower (or borrowers) with a diminished or impaired credit rating or with a limited credit history. A borrower’s credit history is reflected in their credit report and routinely
converted into a numerical credit score often referred to as a Fair Isaac Corporation (or “FICO”) score. Generally, a loan made to a borrower with a FICO score or other credit score below [*] has historically been considered subprime and
many loans made to borrowers above [*] may also be considered subprime if the loan exhibits other high risk factors (often referred to as risk layering). Examples of risk factors include loans where: (a) the borrower is at the maximum
loan-to-value (“LTV”) or combined LTV (“CLTV”) for the loan program (generally any LTV above 80% for a first lien or CLTV above 90% for a junior lien) would be considered a layered risk factor; (b) the loan has reduced or
limited income documentation; (c) the loan is at or near the maximum debt-to-income (“DTI”) ratio (generally the maximum DTI ratio for subprime loans is 50-55%) for the loan program; (d) the occupancy type for the loan is other
than the borrower’s primary residence. There are many other risk layering factors, including borrowers who have purchased multiple properties or have taken previous equity withdrawal (cash out) refinancings within the last 12-24 month period,
non-arm’s length purchase transactions and unsupported or high risk collateral properties, among others.

 For certain of the features that are listed
in question 1 above, we believe the feature, in isolation, would not result in a loan being classified as subprime. For example, we do not believe the fact that a loan has a prepayment penalty would necessarily result in that loan being classified
as subprime. However, the factors you have listed in your definition are layered risk factors the Company considers in conjunction with a borrower’s FICO score in addition to those discussed above that determine whether the loan would be
classified as subprime.

 3

 Pursuant to the Subprime Guidance, for loan applications taken after September 13, 2007, the GSEs will generally
consider mortgage loans with a credit score above 660 that have additional risk layering terms or features to fall within the definition of subprime. However, it should be noted that prior to September 2007, the Company utilized a
FICO score threshold of [*]. Thus, the data provided in this response includes loans with FICO scores above [*] only if the loan has one or more of the additional layered risk factors described above.

 Please provide us with a comprehensive analysis of your exposure to subprime residential loans. In particular:

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Provide us with your risk management philosophy as it specifically relates to subprime loans. Please address:

•

 Your origination policies;

•

 The purchase, securitization and retained interests in loans;

•

 Investments in subprime mortgage-backed securities; and

•

 Loans to, commitments to, and investments in subprime lenders.

 Response B:

 The Company’s risk management policy and control structure is described in detail in
“Quantitative and Qualitative Disclosures about Market Risk – Risk Management” in Part II, Item 7A of the Form 10-K. The risk management philosophy and procedures related to subprime loans are consistent with those general
philosophies and procedures. In response to your request, we have elaborated on the specific policies and procedures related to subprime loans. However, we believe that the discussion in Item 7A, beginning on page 93 of the Form 10-K provides a
comprehensive description of the Company’s risk management philosophy and procedures, and this response should be read in conjunction with that disclosure.

 Origination policies

 The philosophy of the Company’s origination process is to ensure that loans originated by the Company meet
acceptable and prescribed eligibility and underwriting criteria. Towards that end, a loan evaluation process is adopted within a framework of credit underwriting policies and collateral valuation. The Company’s underwriting policy is designed
to ensure that all borrowers pass an assessment of capacity and willingness to pay, which includes an analysis of applicable industry standard credit scoring models (e.g., FICO scores), debt ratios and reserves of the borrower.
Loan-to-collateral value ratios are determined based on independent third-party property appraisal/valuations, and security lien position is established through title/ownership reports. As part of the mortgage lending business strategy, almost all
loans are sold in the secondary market through securitizations and whole loan sales.

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 The purchase, securitization and retained interests in loans; and investments in subprime mortgage-backed securities

 All residential mortgages, whether purchased or originated, are carried at fair value. The most common disposition strategy utilized by the Company for
such positions is securitization. The Company typically retains certain of the lower-rated securities of such securitizations, often referred to as residual tranche securities.

 In addition to whole loan positions and residual interests in securitizations sponsored by the Company, the Company invests in subprime mortgage-backed securities or collateralized debt obligation (“CDOs”)
securities that are in whole or in part backed by subprime loans or subprime backed securities. In addition, the Company enters into derivative transactions whose value is based in whole or in part on subprime mortgages or subprime-backed
securities. In addition, the Company underwrites securities issued by CDOs.

 All such positions, whether whole loans, investments in securities, or
derivatives, are reported daily to senior management via the Company’s daily risk aggregation and reporting system. These reports are distributed to certain members of the respective Business Units (“BUs”), Market Risk Department
(“MRD”), Credit Risk Department and Financial Control Group.

 Position risk limits have been established and are monitored at the trading desk
and BU level. Limits are discussed with members of the BU, MRD and management, to ensure appropriateness. When the limits are approved, they are implemented in the Company’s daily risk reporting process. The limit structure is reviewed
periodically with members of the BU, MRD and management.

 Trading desks employ various risk hedging and risk transfer techniques. Interest rate risks are
generally hedged. Spread risk and other risks arising from subprime product are hedged or traded as appropriate. Products utilized to execute hedging strategies for subprime positions include interest rate products such as futures and swaps, and
credit instruments such as credit default swaps and actively traded indices such as the ABX.

 The Company utilizes the statistical technique known as
value-at-risk (“VaR”) as one of the tools used to measure, monitor and review the market risk exposures to its trading and other portfolios. The MRD calculates and distributes daily VaR-based risk measures to various levels of management.
The MRD independently reviews the Company’s trading and other portfolios on a regular basis from a market risk perspective utilizing VaR and other quantitative and qualitative risk measures and analyses. The Company’s trading and other
businesses and the MRD also use, as appropriate, measures such as sensitivity to changes in interest rates, prices, implied volatilities and time decay to monitor and report market risk exposures. Stress testing, which measures the impact on the
value of existing portfolios of specified changes in market factors for certain products, is performed

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periodically and is reviewed by trading division risk managers, desk risk managers and the MRD. The MRD also conducts macro scenario analyses, which estimate
the Company’s revenue sensitivity to a set of specific, predefined market and geopolitical events. In addition, the Company also monitors its net exposure when evaluating risks associated with its trading and other portfolios. Net exposure is
defined broadly as the potential loss (or gain) to the Company in a 100 percent default scenario, assuming zero recovery.

 Loans to, commitments to, and
investments in subprime lenders

 The Company provides financing to mortgage originators collateralized by residential mortgage loans. Under these
arrangements, the Company requires originators to provide collateral in excess of the monies advanced, and values the collateral on a routine basis to ensure that the value of the collateral exceeds the value of the monies advanced in accordance
with the collateral agreements. Due diligence is performed prior to initiating a warehouse loan commitment facility, and this due diligence includes a review of the counterparty’s credit underwriting, origination, operations, quality control
and servicing functions.

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Quantify your portfolio of subprime residential mortgages. If practicable, please breakout the portfolio to show the underlying reason for subprime definition, in other words,
subject to payment increase, high LTV ratio, interest only, negative amortizing, and so on.

 Response C:

 As discussed, the Company applies a “risk layering” approach to classifying its mortgage portfolio. Under that approach, mortgage loans with a FICO score below
a certain threshold are automatically considered subprime, while mortgage loans above that threshold are considered subprime if one or more high risk factors are present. While the Company recently has revised its definition of subprime to include
all mortgage loans with FICO scores lower than [*] as subprime, the information we have supplied is stratified based on the previously used definition, which considered a loan above [*] to be subprime only if additional risk factors were present.
The Company’s portfolio of subprime residential mortgage loans is carried at fair value. [*]:

 [*]

 6

 As discussed, the Company utilizes a risk layering approach in determining the subprime classification of a loan.
Accordingly, it is likely that a loan may be considered subprime because