In 1997, Morgan Stanley (NYSE:MWD) merged with Dean Witter Discover & Co. to create a financial powerhouse. The transaction's mastermind was Philip Purcell, a former McKinsey consultant trained in developing bold strategic plans. According to him, the new entity would derive tremendous synergies.

So far this year, Morgan has drawn intense criticism from former executives who claim that the merger has been a failure. In response, Morgan decided to spin off the Discover credit card unit.

It's the unraveling of Purcell's grand vision, right? Not so fast. According to a Wall Street Journal story, Morgan's board may decide this week to postpone the spinoff due to some major problems.

First of all, Purcell's sudden resignation cast uncertainty on Morgan. Where is the company going? Who will be in charge? If anything, the company may want to focus on quickly finding a new CEO and establishing a clear-cut strategy for the firm.

Next, Morgan may need to infuse capital into the Discover spinoff. To remain competitive, Discover will need a strong balance sheet, which translates into lower borrowing costs. Essentially, the credit card business is about the spread between how much a company pays to borrow money and how much it charges customers in interest. Credit card companies that are part of large organizations -- such as banks -- can minimize their borrowing costs. Cross-sale opportunities associated with "membership" in such establishments should help lower marketing costs.

It now appears that the credit card industry is slowing down, especially in the U.S. Providian (NYSE:PVN) recently sold out to Washington Mutual (NYSE:WM) because of competitive pressures, while Capital One (NYSE:COF) acquired Hibernia (NYSE:HIB).

This is not to imply that the credit card business is bad. Companies may simply be more potent as part of a well-capitalized organization than as a standalone entity. Discover, for instance, is the seventh largest U.S. credit card company, contributing 20% of Morgan's pretax net income.

Ironically, Purcell's vision of Discover may be panning out. As the volatile business of trading and investment banking falters, Discover's steadiness may help cushion fluctuations. Vindication for Purcell? Perhaps. But Morgan is still an investment bank. Its earnings are largely tied to proprietary trading activity or conditions in M&A and investment-banking markets. With many recent defections of Morgan's rainmakers, uncertainty about the company's leadership and takeover speculation in the stock, investors would be wise (and Foolish) to wait for a bit more clarity.

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Fool contributor Tom Taulli does not own shares mentioned in this article.