Morgan Stanley settles with MBIA, sees $1.8 billion charge

Morgan Stanley and MBIA Inc have agreed to a settlement to extinguish credit-default swaps and exit litigation against one another that will lead to a charge of $1.8 billion before taxes in the fourth quarter for Morgan Stanley, the bank said on Tuesday. After a tax credit, Morgan Stanley will lose $1.2 billion on the deal.
Under the agreement announced on Tuesday, MBIA agreed to withdraw from a residential mortgage-backed security lawsuit against Morgan Stanley, and Morgan Stanley agreed to withdraw from lawsuits challenging MBIA's planned restructuring.