Morgan Stanley to pay US$3.2B over contributors to '08 crisis

ALBANY, N.Y. -- Morgan Stanley will pay US$3.2 billion in a settlement over bank practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities, authorities announced Thursday.

See Full Article

The nationwide settlement, negotiated by the working group appointed by President Barack Obama in 2012, says the bank acknowledges that it increased the acceptable risk levels for mortgage loans pooled and sold to investors without telling them. Loans with material defects were included, packaged into the securities and sold.

Morgan Stanley said it previously reserved funds for all related amounts. The bank acknowledged an agreement in principle for the federal settlement of $2.6 billion in a regulatory filing a year ago.

"We are pleased to have finalized these settlements involving legacy residential mortgage-backed securities matters," spokesman Mark Lake said Thursday.

The Justice Department said the $2.6 billion federal penalty to resolve claims about the bank's marketing, sale and issuance of those securities is the largest piece of settlements with the working group that have totalled approximately $5 billion. Illinois will get $22.5 million in the settlements announced Thursday.

For New York state, the settlement includes $400 million of mortgage reductions and other consumer and community relief, as well as $150 million in cash. State Attorney General Eric Schneiderman co-chairs the working group.

"Today's settlement will bring money to the families and communities that need resources the most, while helping New Yorkers avoid foreclosure and spurring the construction of more affordable housing statewide," Schneiderman said.

The $400 million will go toward the creation and preservation of affordable rental housing, land banks, code enforcement, communities purchasing distressed properties, and principal reductions for homeowners, according to the attorney general's office.

The New York-based investment bank reported a fourth-quarter profit of $908 million. It recorded $3.1 billion in legal expenses in 2014 for settlements with state and federal regulators over its role in the housing bubble and subsequent financial crisis.


Latest Economic News

  • Bank places 100 'lucky pennies' across U.S. worth $1,000 each

    Economic CTV News
    DETROIT -- Stopping to pick up a stray penny off the ground may not seem worth the effort, yet one bank is trying to change that mindset by placing 100 fake pennies across the country worth $1,000 apiece. Source
  • Postmedia: Layoffs possible if buyouts don't meet cost-cutting target

    Economic CTV News
    TORONTO -- Postmedia said Thursday it plans to reduce its salary costs by 20 per cent through voluntary staff buyouts, adding that layoffs are possible if that target isn't met as it announced net losses that nearly doubled in its most recent quarter. Source
  • Wal-Mart, offer more choices for Singles Day

    Economic CTV News
    NEW YORK -- Wal-Mart and are offering more choices for Chinese shoppers ahead of Singles Day, one of the world's biggest online shopping days of the year. That includes two-hour delivery services at some Wal-Mart stores and a Wal-Mart global store on JD Worldwide,'s cross-border platform. Source
  • Postmedia aiming to cut staff costs again

    Economic CBC News
    Postmedia Network Canada Corp. says its intends to reduce staffing costs again as the company reported lower revenue and a deeper quarterly net loss. The company, which currently has about 4,000 employees, says it plans to cut costs through staff buyouts over the next few weeks, adding that layoffs are possible if its target isn't met. Source
  • Snoopy, Peanuts gang, cut loose by insurance giant MetLife as it retools

    Economic CBC News
    The MetLife Snoopy Two blimp comes in for a landing at the Park Township Airport in Holland, Mich., in this July 2007 photo. After 31 years as the face of insurance giant MetLife Inc. Source
  • Justin Trudeau on hand as Amazon announces Toronto-area expansion that will employ 700 people

    Economic CBC News
    Prime Minister Justin Trudeau is set to make an announcement at an Amazon facility in Brampton, Ont., on Thursday. It's not known what the announcement may entail, but given recent news from the company, it's likely to be jobs-related. Source
  • Justin Trudeau to make announcement at Toronto-area Amazon facility

    Economic CBC News
    Prime Minister Justin Trudeau is set to make an announcement at an Amazon facility in Brampton, Ont., on Thursday. It's not known what the announcement may entail, but given recent news from the company, it's likely to be jobs-related. Source
  • Snoopy, Peanuts gang, cut loose by MetLife as it retools biz

    Economic CTV News
    Snoopy has been handed the pink slip. After 31 years (almost 170 dog years) as the face of insurance giant MetLife Inc., the company said Thursday that it is launching a new global branding effort, marking the end of a long relationship with Charlie Brown's beagle and the Peanuts crew. Source
  • AltaGas gives green light to North Pine propane plant in northeastern B.C.

    Economic CTV News
    CALGARY -- AltaGas Ltd. (TSX:ALA) has decided to go ahead with construction of a propane extraction plant in northeastern British Columbia that will supply the proposed Ridley Island export terminal near Prince Rupert, B.C. The Calgary-based company says the North Pine processing facility, 40 kilometres northwest of Fort St. Source
  • Energy East pipeline 'will happen,' but taking too long: Arthur Irving

    Economic CTV News
    HALIFAX - The chairman of Irving Oil says the proposed Energy East Pipeline being considered by federal regulators "will happen," but it's taking too long. Arthur Irving says Alberta's struggling economy badly needs the pipeline to sell its fossil fuels, while his firm remains eager to form a partnership with TransCanada (TSC:TRP) to build a deepwater terminal in the Bay of Fundy where tankers can ship the crude to the world. Source