JP Morgan Chase & Co is set to receive $645 million out of this settlement.
JPMorgan Chase & Co has disclosed that it is set to receive $645 million arising out of a settlement from a litigation with Deutsche Bank AG and the Federal Deposit Insurance Corp (FDIC) related to its acquisition of Washington Mutual’s (WaMu) banking operations during the 2008 financial crisis.
As per information available in a regulatory filing, JPMorgan will collect amount from Washington Mutual Bank, for which the FDIC acts as receiver.
According to the terms of the settlement, in exchange, JP Morgan will drop its $1 billion plus claim over Washington Mutual’s purchase.
The largest US bank by asset has further disclosed that Deutsche Bank, the trustee overseeing 99 trusts holding residential mortgage securities backed by soured WaMu home loans, will have a claim against the estate.
Earlier, 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 JPMorgan and the FDIC over losses stemming from alleged defects in WaMu’s mortgage underwriting.
JP Morgan has now said that the current settlement after a court’s approval will bring an end to four WaMu-related lawsuits related to the FDIC, which were pending in the federal court in Washington DC.
JP Morgan and the FDIC have earlier fought pitched battles over who is liable to investors for claims arising out of WaMu’s collapse.
The issue began when FDIC seized WaMu’s operation on September 25, 2008. WaMu was the United states’ largest savings and loan operation. Having seized it, the FDIC then sold its banking operation to JP Morgan for $1.9 billion. Meanwhile WaMu’s holding company filed for bankruptcy.
The spokesperson for both companies, Deutsche Bank and the FDIC declined to comment.