Delaware Judge to Rule on WaMu's Case Against JP Morgan: a Fire Sale by Any Other Name is Still a Fire Sale
Wait, wait, wait. Wait for it because here it comes and it's going to be huge. While the Fed is playing catch me if you can with inflation, the U.S. government is jumping into the automaker business, and the SEC is waiting to get the pink slip, the FDIC is bracing for continued bank failures and hoping WaMu's case against it doesn't turn ugly. Oops, too late, it's already ugly!
Expect a decision in the WaMu/JP Morgan/FDIC debacle soon (via Reuters):
WILMINGTON, Delaware (Reuters) - A bankruptcy court judge on Wednesday said she may rule by next month on efforts by Washington Mutual Inc to get back more than $4 billion in cash deposits to which it lost access when the bank was sold to JPMorgan Chase & Co (JPM) last year.
U.S. Bankruptcy Judge Mary Walrath said at a brief court hearing in Wilmington, Delaware, that she may decide on Washington Mutual's request for summary judgment on the matter before a June 24 scheduled court hearing.
Washington Mutual contends in court papers that JPMorgan is withholding deposits without any legitimate basis.
Washington Mutual Bank was closed by the U.S. government in September, in one of the largest bank failures in U.S. history.
Its banking assets were sold the same day to JPMorgan for $1.9 billion, and the parent holding company filed for bankruptcy protection a day later in Delaware.
WaMu has said that JPMorgan improperly claims it acquired the $4 billion in deposits as part of the takeover but that this money should have been treated like any other deposit at the bank.
WaMu has said it needs access to that cash to come up with its Chapter 11 plan, and that by withholding the deposits, JPMorgan could be earning as much as $200 million per year in interest.
A JPMorgan Chase spokesman said the company had no comment.
The lawsuit was filed as an adversary proceeding to WaMu's main bankruptcy case.
The bankruptcy case is In re: Washington Mutual, Inc. U.S. Bankruptcy Court, District of Delaware, No. 08-12229.