JPMorgan (JPM) is suing the Federal Deposit Insurance Corp. to recover more than $1 billion tied to its purchase of Washington Mutual when that bank failed in 2008.
In a federal court complaint, the New
York bank said that the FDIC failed to honor obligations under the Washington
Mutual agreement, and that has subjected JPMorgan to massive liability.
The FDIC became the receiver for
Washington Mutual, during the largest bank failure in U.S. history. JPMorgan
Chase & Co. said the FDIC then made promises to indemnify or protect the
bank against liabilities if it stepped in.
JPMorgan said in a court filing
Tuesday that the FDIC then declined to acknowledge that claims against JPMorgan for Washington Mutual's conduct should have been claims against the
The FDIC did not immediately return
calls seeking comment from The Associated Press early Wednesday.
The Washington Mutual receivership's
assets are about $2.75 billion, according to JPMorgan.
JPMorgan has entered into a series of
legal settlements over sales of mortgage-backed securities in the years
preceding the financial crisis. As the housing market collapsed between 2006
and 2008, millions of homeowners defaulted on high-risk mortgages. That led to
billions of dollars in losses for investors who bought securities created from
bundles of mortgages.
Last month, the bank reached a $4.5
billion settlement that covered 21 major institutional investors.
Most of JPMorgan's mortgage-backed
securities came from Washington Mutual and the investment bank Bear Stearns,
which it also acquired in 2008.
The bank has been negotiating with the
U.S. Justice Department to resolve U.S. government claims that JPMorgan misled
mortgage finance giants Fannie Mae and Freddie Mac about risky mortgage-backed
The bank said in October that it set aside $9.2 billion in the July-September quarter to cover legal costs.
Shares of JPMorgan climbed 17 cents to
$55.89 Wednesday before markets opened. The shares have climbed nearly 27
percent so far in 2013.