“Ruth Porat didn’t see it coming.

“The Morgan Stanley (MS) banker who advised the U.S. Treasury Department on its rescue of Fannie Mae and Freddie Mac in September 2008 and thought she understood the risks to the financial system had just spent a weekend trying to save Lehman Brothers Holdings Inc. when she got a message: Would she come back to deal with American International Group Inc. (AIG)?

“’The call I got was ‘We worked on the wrong thing,’’ Porat, 55, said in an interview last month at the New York headquarters of the bank where she’s now chief financial officer. That AIG ‘could vanish that quickly and the impact that could have throughout the country, and that nobody could see it coming, was just staggering.’

“Porat’s own bank almost vanished when hedge funds, spooked by difficulties getting money out of bankrupt Lehman Brothers, pulled more than $128 billion in two weeks from Morgan Stanley. To stay afloat it sold a 20 percent stake, became a bank holding company and borrowed $107.3 billion from the Federal Reserve on a single day.”

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Read full Bloomberg article here