Business
Morgan Stanley Agrees to $2.6 Billion Mortgage Settlement
Morgan Stanley headquarters in New York (AP Photo)
(Bloomberg) — Morgan Stanley agreed to pay $2.6 billion to settle probes into its creation and sale of residential mortgage-backed securities, as the U.S. Department of Justice holds another large Wall Street firm to account for the 2008 financial crisis.
The firm increased legal reserves related to mortgage matters by about $2.8 billion, cutting 2014 income from continuing operations by $2.7 billion, or $1.35 a share, Morgan Stanley said Wednesday in an annual regulatory filing. It’s the fourth time in the past five quarters that the New York-based bank reduced earnings in the weeks after announcing them.
JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. — the three biggest U.S. banks — previously settled with federal and state authorities over the probes, agreeing to pay a total of more than $35 billion in cash and consumer relief. Goldman Sachs Group Inc. disclosed this week that it received a letter from the U.S. Attorney’s Office in Sacramento, saying a civil lawsuit may be brought against the firm.
Patrick Rodenbush, a Justice Department spokesman, declined to immediately comment about the settlement.
