Morgan Stanley to pay $3.2bn over mortgage-backed securities

Morgan Stanley and Goldman Sachs, which agreed to pay $5.06bn last month, are two of the last big banks to pay up for their role in the 2008 economic crisis

Morgan Stanley will pay $3.2bn to settle federal and state charges that it misled investors in residential mortgage-backed securities during the financial crisis, New York's attorney general announced on Thursday.

The deal comes a month after Goldman Sachs agreed to pay $5.06bn to resolve civil claims related to the firm's securitization, underwriting and sale of residential mortgage-backed securities from 2005 to 2007. The Goldman Sachs settlement included $875m in cash payments and $1.8bn in consumer relief.

Related: Goldman Sachs profit drops after $5bn mortgage-backed bond settlement