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Morgan Stanley to pay $1.25-billion settlement for bad mortgages

US banking giant Morgan Stanley has agreed in principle to pay a $1.25-billion settlement for its involvement in the housing market bust. The bank allegedly misled investors about mortgage-backed securities.

Although still subject to final approval, Tuesday's settlement would resolve a 2011 lawsuit filed by the US Federal Housing Finance Agency (FHFA) against Morgan Stanley.

The FHFA accuses the Wall Street firm of making false statements and omitting information in the sale of around $11 billion (8 billion euros) in mortgage-backed securities to Fannie Mae and Freddy Mac. The later two companies, which are state sponsored, provide funding to the US housing market.

US banks have faced a host of lawsuits since the 2008 financial crisis. In November, JP Morgan Chase agreed to pay $13 billion, the largest settlement ever paid by a corporation in a government settlement.

slk/jm (AFP, Reuters, dpa)

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