The Federal Deposit Insurance Corporation (FDIC) has approved a global settlement of the bankruptcy case involving Washington Mutual Inc, one of the largest US banks to fail as a result of the housing and credit crisis.
“The global settlement is subject to the approval of the United States Bankruptcy Court for the District of Delaware, where relevant documents were filed today,” the FDIC said in a statement Friday. “This agreement will result in substantial recoveries to the receiver and resolve potential claims that could have taken years and millions of dollars to litigate,” the FDIC’s general counsel Michael Bradfield added.
The FDIC is a participant in the global settlement because of claims and counterclaims involving the company resulting from its role as receiver. The agreement also settles claims between WMI and JPMorgan Chase, the acquirer of the failed Washington Mutual Bank. Washington Mutual, or WaMu, one of the largest US savings and loans institutions, was closed by regulators who orchestrated a last-minute sale of its assets to JPMorgan Chase, on September 25.
Based in Seattle, Washington with 307 billion dollars in assets, it was heavily exposed to bad mortgage investments at the heart of the financial crisis. Its failure came amid turmoil in financial markets that saw the bankruptcy of Wall Street giant Lehman Brothers and government takeover of mortgage finance groups Fannie Mae and Freddie Mac.
The Wall Street Journal reported Wednesday that JPMorgan Chase would be willing to drop its legal action demanding reimbursement of 1.4 billion dollars in expenses spent to purchase Washington Mutual’s assets in exchange to the largest part of the bank’s assets that are due to be liquidated.
New York, May 22, 2010 (AFP)
