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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 U.S. bank by assets said it
will drop its more than $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 $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 $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. The FDIC's full name is the .
(Reporting by Jonathan Stempel in New York; Editing by Cynthia
Osterman)
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