Morgan Stanley lawsuit settled for $1.25 billion
Morgan Stanley lawsuit over mortgage securities with the Federal Housing Finance Agency was settled for $1.25 billion, the company said Tuesday. The Morgan Stanley lawsuit was part of a larger one in which the government sued 18 financial firms for selling mortgage securities that turned toxic when the housing market collapsed.
Morgan Stanley said Tuesday that it has agreed to pay $1.25 billion to resolve a lawsuit over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.Skip to next paragraph
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In 2011 the government sued 18 financial firms for selling Fannie and Freddie $196 billion in mortgage securities that turned toxic when the housing market collapsed. The government had to rescue Fannie and Freddie, which own or guarantee about half of all U.S. mortgages, in a $187 billion bailout during the financial crisis.
Morgan Stanley, which is based in New York, will record $150 million more in legal reserves, which will hurt fourth-quarter earnings by about 5 cents per share.
The settlement still has to be approved by the parties involved, Morgan Stanley said in a regulatory filing.
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