Morgan Stanley Smacked by NY AG For Mortgages

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Law360, New York (February 11, 2016, 10:11 AM ET) — 6-Pack Bank and Global BrokerDealer Morgan Stanley agreed today to pay $3.2 billion to resolve claims that it misled investors about mortgage-backed securities before the financial crisis, New York Attorney General Eric Schneiderman said.

The settlement is the latest among big banks related to the financial crisis, and ends government claims that Morgan Stanley misrepresented to investors the mortgages it packaged into securities. 

The settlement is the latest among big banks related to the financial crisis, bringing to a close government claims that Morgan Stanley told investors that the mortgages it packaged into securities were of higher quality than was actually the case. The firm’s misstatements cost investors billions of dollars and the problematic mortgages helped cause many homeowners to lose their homes or suffer significant financial losses, Schneiderman said.

“Today’s agreement is another victory in our efforts to help New Yorkers rebuild in the wake of the financial devastation caused by major banks,” Schneiderman said in a statement.

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Goldman Banged By DOJ; 5bil MBS Hickey

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(MarketsMuse.com)-Announced after the close of trading on Thursday, Goldman Sachs (NYSE:GS) made a $5.1 billion settlement with the U.S. Department of Justice, AGs from NY and IL and two other federal agencies in connection with the big bank’s underwriting and sale of mortgage-backed securities (MBS) sounds whopping, but seemed to have little impact on the Squid’s stock price in after-hours trading ..Below extract courtesy of CNBC..

Goldman Sachs  said Thursday that its fourth-quarter earnings will take a roughly $1.5 billion hit as it has reached a nearly $5.1 billion settlement agreement in principle related to its “securitization, underwriting and sale of residential mortgage-backed securities (MBS) from 2005 to 2007.”

goldman-sachs-squidThe bank said in a Thursday release that its agreement in principle will resolve actual and potential claims from the Department of Justice, the New York and Illinois Attorneys General, the National Credit Union Administration and the Federal Home Loan Banks of Chicago and Seattle.

The terms of the agreement say that Goldman will pay a $2.385 billion penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief. The bank said that the relief will be partly composed of principal forgiveness for underwater homeowners and distressed borrowers.

Goldman will also contribute to construction financing, affordable housing, and debt restructuring support.

Shares of the Squid traded slightly negative in after-hours action.

The agreement in principle is still subject to final negotiation of the documentation, the bank said.

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