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Morgan Stanley has reached a $3.2 billion settlement with state and federal authorities, the New York attorney general's office announced Thursday.


In the deal, the investment bank acknowledges that it misrepresented the risks of 

 leading up to the 2008 housing and financial crisis.


Morgan Stanley knew that it was selling securities backed by residential mortgages with "material defects" — such as loans that were "underwater," where the loan was larger than the value of the house.

Internal emails helped document that the company was fully aware of the high risks of the loans it was securitizing, the New York attorney general's office writes:

The settlement announced Thursday was negotiated by a working group including both federal and state authorities, led by New York Attorney General Eric Schneiderman.


The $3.2 billion deal represents an increase from the $2.6 billion that Morgan Stanley 

. As NPR's Yuki Noguchi reports, "The final terms now include a program to help struggling homeowners. For instance, New York state alone will receive more than half a billion dollars, the majority of which will go to support local housing programs."


That additional money will be used, among other things, to help residents avoid foreclosure and fund affordable housing development.

The Associated Press helps put the value of the $3.2 billion in perspective:

Business and Economic News

Crime, Law and Justice

The investment bank, agreeing that it misrepresented the risk and value of mortgage-backed securities, reached the settlement deal with state and federal authorities.

Morgan Stanley will pay $3.2B for contributing to mortgage crisis

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