Morgan Stanley will pay the New York State a token $550 million for deceptively selling mortgage-backed securities in the years leading up to the 2008 financial crisis, New York Attorney General Eric Schneiderman announced today. This comes a year after the bank reached a $2.6 billion settlement with the Department of Justice. The bank's settlement now totals $3.2 billion.

This settlement with the state will comprise $400 million in consumer relief funds and $150 million in cash. The relief funds will go toward affordable housing and loan reductions to help residents avoid foreclosure. Schneiderman called the settlement "another victory in our efforts to help New Yorkers rebuild in the wake of the financial devastation caused by major banks...[it] will deliver resources to the families and communities that need them the most, while helping New Yorkers avoid foreclosure, and spurring the construction of more affordable housing units statewide."

According to Schneiderman, Morgan Stanley admitted that it increased the acceptable risk levels for loans; at one point in 2006, the head of the bank's team tasked with due diligence wrote to a colleague asking that he "not mention the 'slightly higher risk tolerance' in these communications. We are running under the radar and do not want to document these types of things." Later in 2006, another member of that team sent a list of questionable loans that required approval and wrote, "I assume you will want to do your 'magic' on this one?" And as previously reported, the bank called its own mortgage-backed securities "Nuclear Holocaust."

This $3.2 billion—not to mention the $550 million set aside for New York—is but a drop in the bucket for the bank, which currently has about $40 billion in revenue and a $70.8 billion market cap. Along with Goldman Sachs, the bank has 37 percent of market share. The settlement also pales in comparison to sums paid out by other banks: the same working group that reached this settlement got $16.7 billion from Bank of America, $7 billion from Citigroup, and $13 billion from JPMorgan Chase & Co.

Goldman Sachs is expected to pay out $5.1 billion, a recent announcement to which Senator Elizabeth Warren responded with outrage, writing, "Seven years later. No admission of guilt. No individuals are going to jail. A payment that’s barely a fraction of the billions investors lost - and the trillions our economy lost—because of this fraud. And over half of it could be tax deductible! That’s not justice—it’s a white flag of surrender."

To date, only one Wall Street executive has gone to prison for his role in the 2008 crisis.