Morgan Stanley has reached a $3.2 billion settlement with federal and state authorities over bank practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities.
The nationwide settlement, negotiated by appointees of 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. authorities said.
For New York state, the settlement includes $400 million of mortgage reductions and other consumer and community relief and $150 million in cash, said state Attorney General Eric Schneiderman, co-chair of the group of Obama appointees.
Morgan Stanley has said previously that it reserved funds for all settlement amounts.
"Today's settlement will deliver resources to the families and communities that need them the most, while helping New Yorkers avoid foreclosure, and spurring the construction of more affordable housing units statewide," Schneiderman said in Thursday's announcement.
