Morgan Stanley to Pay $3.2 Billion over Contributors to ’08 Crisis
CAPITALISM, 15 Feb 2016
Michael Virtanen, Associated Press – Reader Supported News
Morgan Stanley’s headquarters in Manhattan. (photo: New York Times)
Morgan Stanley will pay $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 [11 Feb 2016].
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 totaled approximately $5 billion. Illinois will get $22.5 million in the settlements announced Thursday.
“Our work is far from over,” said New York Attorney General Eric Schneiderman, who co-chairs the group. “Communities across the country have not gotten back to where they were before the crash.”
Total settlements so far are about $64 billion, Schneiderman said.
The working group previously reached major settlements with Citigroup for $7 billion, JPMorgan for $13 billion and Bank of America for $16.65 billion.
For New York state, the Thursday’s settlement includes $400 million of mortgage reductions and other consumer and community relief, as well as $150 million in cash.
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.
Go to Original – readersupportednews.org
DISCLAIMER: The statements, views and opinions expressed in pieces republished here are solely those of the authors and do not necessarily represent those of TMS. In accordance with title 17 U.S.C. section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. TMS has no affiliation whatsoever with the originator of this article nor is TMS endorsed or sponsored by the originator. “GO TO ORIGINAL” links are provided as a convenience to our readers and allow for verification of authenticity. However, as originating pages are often updated by their originating host sites, the versions posted may not match the versions our readers view when clicking the “GO TO ORIGINAL” links. This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.