The National Credit Union Administration said that Morgan Stanley has agreed to pay $225 million to settle claims that it sold toxic mortgage-backed securities to credit unions that later failed, Reuters reported. 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.
