Morgan Stanley to pay $63m mortgage bond settlement: FDIC
Morgan Stanley has agreed to pay nearly $63 million to resolve claims over the sale of toxic mortgage-backed securities to three banks that later failed, the Federal Deposit Insurance Corp said today. The settlement resolves lawsuits the U.S. regulator filed as receiver for the three failed banks against Morgan Stanley and other defendants over what the FDIC said were misrepresentations in the offering documents for the mortgage-backed securities. Morgan Stanley declined comment on the settlement. It was the latest step by the Wall Street bank to resolve U.S. government claims stemming from the sale of mortgage bonds before financial crisis. Morgan Stanley in February 2015 said it had reached an agreement in principle to pay $2.6b as part of a settlement with U.S. Justice Department over mortgage bonds. The latest settlement followed an earlier FDIC accord last year in which Morgan Stanley agreed to pay $24 million over mortgagebacked securities sold to a fourth failed bank, Franklin Bank of Houston. The National Credit Union Administration in December separately announced that the Wall Street bank would pay $225 million to resolve similar claims over securities sold to credit unions that later failed. The FDIC said the funds from the latest $62.95 million deal would be distributed among the receiverships for Colonial Bank of Montgomery, Alabama; Security Savings Bank of Henderson, Nevada; and United Western Bank of Denver.