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.



Advertisements

Latest Economic News

  • Ottawa-area farmer fights order to stop selling, distributing raw milk

    Economic CTV News
    OTTAWA -- An eastern Ontario farmer who has been ordered to stop selling raw milk is hoping to persuade the province to let him continue the practice. Michael Ilgert has been offering unpasteurized milk through a cow-share arrangement at his farm near Golden lake, Ont. Source
  • More than a third of millennial homeowners hit their parents up to pay costs: HSBC survey

    Economic CBC News
    The vast majority of Canadian millennials in a global survey of over 9,000 adults plan to buy a home soon, but most are nowhere near financially ready to enter the market. HSBC bank commissioned polling firm Kantar TNS to survey 9,009 people in nine countries: Canada, Australia, China, France, Malaysia, Mexico, the UAE, the United Kingdom and the U.S. Source
  • Fake fashion fuels vast illicit profits, sea of human misery

    Economic CTV News
    LONDON -- In a warehouse at London's sprawling Heathrow Airport, a border officer pulls open a cardboard box he suspects contains contraband goods. Bingo -- his instincts are rewarded. The box is packed with beige and black sneakers that to the untrained eye look identical to the limited edition Adidas Yeezy Boost, designed by rap star Kanye West, which sold out within minutes of being released last year and now have a resale value many times their original retail price. Source
  • Scotiabank Q1 profit rises 10 per cent to $2.01B of net income, raising dividend

    Economic CTV News
    TORONTO -- Scotiabank had $2.01 billion of net income during the first quarter, up 10 per cent from the same period last year on strong results from its Canadian and international banking operations. The earnings amounted to $1.57 per diluted share, up from $1.43 per diluted share a year ago, when Scotiabank had had $1.81 billion of net income during the first quarter. Source
  • What's next for Samsung as executives face criminal charges?

    Economic CTV News
    SEOUL, Korea, Republic Of -- Five Samsung executives, including the company's 48-year-old billionaire heir, will stand trial in the coming months on bribery, embezzlement and other charges linked to a massive scandal that toppled South Korea's president. Source
  • 5 things analysts and investors want to hear in Trump speech

    Economic CTV News
    WASHINGTON -- Economists and investors will be looking for one thing above all from U.S. President Donald Trump's speech to the nation Tuesday night: Details. What will his promised tax cuts look like? Which Obama-era regulations will be reversed? Will he push for an infrastructure spending plan this year? Source
  • BMO reports $1.49B of net income in 1st quarter, up 39%

    Economic CBC News
    ?The Bank of Montreal had net income of $1.49 billion during its first quarter, up 39 per cent from a year ago, according to results posted early Tuesday. During the same period last year, BMO had $1.07 billion of quarterly profit. Source
  • BMO reports $1.49 billion of net income during first quarter, up 39 per cent

    Economic CTV News
    TORONTO -- The Bank of Montreal (TSX:BMO) had net income of $1.49 billion during its first quarter, up 39 per cent from a year ago. During the same period last year, BMO had $1.07 billion of quarterly profit. Source
  • BMO reports $1.49B of net income during first quarter, up 39 per cent

    Economic CTV News
    TORONTO -- The Bank of Montreal (TSX:BMO) grew its first-quarter net income by 39 per cent to $1.49 billion, beating analyst expectations by a wide margin. The first-quarter for the three months ended Jan. Source
  • BMO, Scotiabank beat expectations, but beyond the numbers, concerns arise

    Economic CTV News
    TORONTO -- Two of Canada's big banks reported first-quarter results Tuesday that were higher than expected, but the earnings were driven by potentially unstable trading revenues as slowing loan growth and rock-bottom interest rates offset gains. Source