JPMorgan Chase’s legal battle with the Federal Deposit Insurance Corp. and Deutsche Bank AG over its acquisition of Washington Mutual’s banking operations is nearing an end, according to an article in Bloomberg by Hugh Son.
The bank’s quarterly regulatory filing shed some light on the issue. From the filing:
Proceedings related to Washington Mutual’s failure are pending before the United States District Court for the District of Columbia and include a lawsuit brought by Deutsche Bank National Trust Company, initially against the FDIC and amended to include JPMorgan Chase Bank, N.A. as a defendant, asserting an estimated $6 billion to $10 billion in damages based upon alleged breaches of certain representations and warranties given by certain Washington Mutual affiliates in connection with mortgage securitization agreements.
According to the filing, Deutsche Bank asserted that JPMorgan Chase may have assumed liabilities for the alleged breaches of representations and warranties in the mortgage securitization agreements.
JPMorgan secured a win at first in June 2015 when the court ruled in favor of it on the question of whether the firm or the FDIC bears responsibility for Washington Mutual Bank’s repurchase obligations, the filling stated. The court said that JPMorgan Chase assumed only those liabilities that were reflected on Washington Mutual Bank’s financial accounting records as of September 25, 2008, and only up to the amount of the book value reflected therein.
But the filing noted the FDIC appealed that ruling and the case has otherwise been stayed pending the outcome of that appeal.
Separate of this, JPMorgan didn’t let its fight with the FDIC end there. It also stated in its quarterly regulatory filing:
JPMorgan Chase has also filed complaints in the United States District Court for the District of Columbia against the FDIC, in its corporate capacity as well as in its capacity as receiver for Washington Mutual Bank, asserting multiple claims for indemnification under the terms of the Purchase & Assumption Agreement between JPMorgan Chase Bank, N.A. and the FDIC relating to JPMorgan Chase Bank, N.A.’s purchase of substantially all of the assets and certain liabilities of Washington Mutual Bank (the "Purchase & Assumption Agreement").
In the latest update, the filing said that JPMorgan, Deutsche Bank National Trust Company and the FDIC have signed a term sheet to resolve:
1. Pending litigation brought by Deutsche Bank National Trust Company against the FDIC and JPMorgan Chase Bank, N.A., as defendants, relating to alleged breaches of certain representations and warranties given by certain Washington Mutual affiliates in connection with mortgage securitization agreements.
2. JPMorgan Chase Bank, N.A.’s outstanding indemnification claims pursuant to the terms of the Purchase & Assumption Agreement. The term sheet is subject to FDIC Board approval, finalization of settlement documents and certain judicial approval procedures.