New Yorkers To Get $550 Million in Settlement With Morgan Stanley Over 2008 Meltdown

Feb. 12, 2016 — Federal and state authorities on Thursday announced a $3.2 billion settlement with Morgan Stanley over practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities, the New York Times reports. 

In the nationwide settlement, 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 packed into the securities and sold.

Morgan Stanley agreed to pay $150 million in cash to New York State, plus $400 million in consumer relief, said state attorney general Eric Schneiderman.

The Morgan Stanley settlement is dwarfed by Bank of America’s $16.6 billion payout, and it leaves Goldman Sachs as the lone bank yet to work out a settlement with the working group appointed in 2012 by President Barack Obama.