NEW YORK (Reuters) - Morgan Stanley has agreed to pay $225 million to settle claims that it sold toxic mortgage-backed securities to credit unions that later failed, the National Credit Union Administration said on Thursday.
The deal boosts to nearly $2.43 billion the amount the NCUA has recovered from banks through lawsuits it began filing in 2011, the U.S. regulator said.
These lawsuits sought to recoup investment losses that led to the 2009 and 2010 failures of the U.S. Central, Western Corporate, Constitution Corporate, Members United Corporate and Southwest Corporate credit unions.
Some lawsuits targeted banks that allegedly sold securities backed by defective residential mortgages. Others targeted trustees that allegedly failed to monitor loan servicers or require banks to buy back defective loans.
“NCUA continues to pursue recoveries on behalf of the corporate credit unions against the financial firms we maintain contributed to the corporates’ losses,” NCUA Board Chairman Debbie Matz said in a statement.
Morgan Stanley did not immediately respond to a request for comment on the settlement, which resolved lawsuits in New York and Kansas.
The NCUA said it is still pursuing similar litigation against other banks including Credit Suisse Group AG, Goldman Sachs Group Inc and UBS AG.
Bank of America Corp, Barclays Plc, Citigroup Inc and JPMorgan Chase & Co are among banks that have already settled.
Our Standards: The Thomson Reuters Trust Principles.