Morgan Stanley has reached a $2.6bn settlement with the US Department of Justice, drawing a line under claims that it mis-sold mortgage-backed securities in the run-up to the financial crisis.
The investment bank had been among half a dozen big banks charged with mis-selling by the DoJ. The first to settle, for $13bn in November 2013, was JPMorgan Chase, which inherited large mortgage origination and securitisation businesses through its acquisitions of Washington Mutual and Bear Stearns, respectively.
Citigroup then paid $7bn to resolve its case last summer, wiping out almost all of its second-quarter profits, followed by Bank of America, whose penalty of $17bn reflected the huge exposures it assumed in the takeovers of Countrywide and Merrill Lynch.