Does JPMorgan Deserve $1B from the FDIC?
After an onslaught of federal litigation, it appears to be JPMorgan Chase’s (NYSE:JPM) turn to sue the government. On Tuesday, JPMorgan filed suit with the Federal Deposit Insurance Corporation, claiming that it is owned more than $1 billion in compensation from unmet obligations related to its acquisition of Washington Mutual Bank.
Washington Mutual Bank — which was owned by Washington Mutual — was the largest bank, as measured by assets under management, to collapse during the 2008 financial crisis. The firm failed following a nine-day run on its deposits that occurred at the same time that Lehman Brothers filed for bankruptcy. The Office of Thrift Supervision placed WaMu Bank into receivership on September 25, 2008, and shortly thereafter sold it to JPMorgan for $1.9 billion.
JPMorgan acquired the bank’s assets, secured debt obligations, and deposits — all told, about $307 billion worth, but JPMorgan had to write down about $31 billion worth of bad loans and raise $8 billion in new capital to absorb the institution.