Washington Mutual reaches global settlement with J.P. Morgan, FDIC

By Caroline Salls

Pittsburgh, March 12 - Washington Mutual, Inc. has reached a global settlement agreement with J.P. Morgan Chase and the Federal Deposit Insurance Corp., according to a company news release.

The company said the terms of the settlement have been read into the record of the U.S. Bankruptcy Court for the District of Delaware.

A status conference was held Friday on a November motion by the FDIC, which is the receiver for Washington Mutual Bank, for relief from the automatic stay imposed by Washington Mutual's bankruptcy filing and a May 2009 summary judgment motion filed by the company.

According to a Friday court filing, the issues were settled pending documentation.

As previously reported, Washington Mutual, requested court approval in May 2009 to investigate potential claims against JPMorgan Chase Bank NA in connection with issues raised in a stakeholder lawsuit filed against JPMorgan.

According to the motion, stakeholders of Washington Mutual Bank and WMI Investment Corp. filed a lawsuit in Texas federal court seeking billions of dollars in connection with JPMorgan's alleged misconduct leading up to its purchase of Washington Mutual Bank's assets for far below market value.

Specifically, the company said the lawsuit "lays out a premeditated plan by JPMC designed to damage two of WMI's most significant assets" so JPMorgan could buy the bank's assets "on the cheap, to the severe detriment of its largest stakeholder, WMI."

The company was granted court approval to conduct the investigation in June 2009.

"WMI is confident that this agreement will provide substantial recoveries for the company's creditors and that it is consistent with WMI's efforts over the last 18 months to maximize the value of its bankruptcy estate," the company said in the release.

"WMI is also pleased that this agreement vindicates the positions it took in court, as the company believes that its court positions created the pressure necessary to move this agreement forward."

Washington Mutual, a Seattle-based savings and loan holding company, filed for Chapter 11 bankruptcy on Sept. 26, 2008. Its Chapter 11 case number is 08-12229.

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