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JPMorgan ends Washington Mutual disputes with FDIC, to receive US$645m
[NEW YORK] JPMorgan Chase & Co on Friday said it will receive US$645 million in a settlement of litigation with the Federal Deposit Insurance Corp and Deutsche Bank AG arising from its purchase of Washington Mutual Inc's banking operations during the financial crisis in 2008.
According to a regulatory filing, JPMorgan will collect the cash payment from the estate of Washington Mutual Bank, for which the FDIC acts as receiver.
In exchange, JP Morgan, the largest US bank by assets said it will drop its more than US$1 billion in claims related to the Washington Mutual (WaMu) purchase.
JPMorgan also said Deutsche Bank, the trustee overseeing 99 trusts holding residential mortgage securities backed by soured WaMu home loans, will have a claim against the estate.
JPMorgan had filed lawsuits seeking to force the FDIC to indemnify it on claims relating to the WaMu purchase, in which it also assumed some of the thrift's liabilities.
Deutsche Bank had filed a US$10 billion lawsuit against the FDIC and JPMorgan over losses stemming from alleged defects in WaMu's mortgage underwriting.
JPMorgan said the settlement requires court approval, and would end four WaMu-related lawsuits involving the bank and the FDIC, and pending in the federal court in Washington, D.C.
The bank and the FDIC have long fought over who is liable to investors for claims arising from Seattle-based WaMu's collapse.
WaMu had been nation's largest savings and loan before the FDIC seized it on Sept 25, 2008 and sold its banking operations to New York-based JPMorgan for about US$1.9 billion. The parent holding company of WaMu filed for bankruptcy protection.
FDIC spokesman David Barr and Deutsche Bank spokeswoman Oksana Poltavets declined to comment.