UPDATE 1-Wamu asks to probe Fed, regulators over collapse

Tue Dec 15, 2009 5:51pm EST

(Adds JPMorgan declining to comment)

By Tom Hals

WILMINGTON, Del. Dec 15 (Reuters) - Bankrupt holding company Washington Mutual Inc (WAMUQ.PK) asked a federal court to compel the U.S. Federal Reserve, U.S. Treasury and more than a dozen others to turn over documents relating to its collapse in 2008.

The company wants to investigate discussions between JPMorgan & Chase Co (JPM.N), regulators, competitors and rating agencies it said led to the seizure of Washington Mutual, or WMI, according to a filing in bankruptcy court on Monday.

It said the alleged misconduct includes JPMorgan "disclosing confidential information, in violation of the confidentiality agreement, to government regulators, ratings agencies, media and investors in an effort to harm WMI by driving down WMI's credit rating and stock price."

Washington Mutual said it needs to determine if it has valuable claims against regulators and others that could be pursued on behalf of its creditors.

The company was the largest U.S. savings and loan when it was seized by the government in September 2008, at the height of the financial crisis, and sold for $1.9 billion to JPMorgan in what Washington Mutual has called a "fire sale."

The company has been investigating possible claims against JPMorgan since the middle of 2009 and cited some of the documents provided by the bank to justify expanding its investigation.

It cites an internal JPMorgan email it said shows that a week before Washington Mutual was seized, the bank's executives were contacted by the Federal Deposit Insurance Corp regarding their interest in Washington Mutual.

The request to expand its investigation also relies on information from a suit filed by American National Insurance Co, which is suing JPMorgan for its losses on its investments in Washington Mutual securities.

American National said in its suit that JPMorgan used former JPMorgan executives who went to work for Washington Mutual as part of a long-term plan to acquire the savings and loan.

JPMorgan declined to comment.

The case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware (Wilmington), No. 08-12229. (Reporting by Tom Hals; editing by Andre Grenon)

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Comments (1)
neeti wrote:
While the case is being pursued in courts by WMI,I as an observer and reader of all WAMU news do feel that so called firesale of WAMU for a paltry sum of $1.9 billion to JP MORGAN has many things hidden behind,not visible to the naked eyes.The amount of $1.9 billion for a bank having 2300 branches,1.5 million customers,sounds peanuts to me.I was in Chicago at this time.On hearing that WAMU was sold to JP for $1.9 billion,my comment to my family was just one:WAMU should have been put up for public auction where all interested banks could bid.My own Indian banks,ICICI BANK LTD.-listed on NYSE as IBN,could have easily paid 10 billion for a bank like WAMU.ICICI BANK could then have 2300 branches with 1.5 million customers ready to serve Americans.JP Morgan does not inspire confidence,as it has availed billions of TARP funds of U.S. govt.And here FIDC handed WAMU with 2300 branches on a platter to JP. I wish all hidden agendas,emails ,conversations,prior to fire sale by FIDC to JP should come out in public knowledge.Then only the real worth/value of WAMU can be determined.If its value is more,JP must be compelled to fork out the difference.Only this step will establish the fairness of FED and the U.S. govt.Thanks

Dec 16, 2009 4:26am EST  --  Report as abuse
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