Just to catch you up if you have not been following the case of WaMu against the FDIC (via JPM) over the fire sale to JP Morgan using an infusion of taxpayer cash late last year, see my May 20 Delaware Judge to Rule on WaMu's Case Against JP Morgan: a Fire Sale by Any Other Name is Still a Fire Sale and March 23 WaMu Sues FDIC, Feds Investigate WaMu - a True Financial WTF and consider yourself sufficiently caught up.

Almost missed this decision. Good thing I am paying attention. Hmm! Wow, this is a mess. Why am I the only one who cares about this? Hate to break it to you, kids, but this is sort of important. No, scratch that. This is CRITICAL. Eyes open now...

AP:

A Delaware bankruptcy judge on Wednesday refused to cede control over a dispute between Washington Mutual Inc. and JPMorgan Chase & Co. involving billions of dollars in bank assets.

Judge Mary Walrath denied requests by the Federal Deposit Insurance Corp. and JPMorgan to stay two adversary proceedings in Washington Mutual's Chapter 11 case, or to transfer the dispute to a federal district court in Washington, D.C., where Washington Mutual has sued the FDIC.

"I do have exclusive jurisdiction to decide what is property of the estate," the judge said.

Walrath also denied JPMorgan's motion to dismiss a complaint in which Washington Mutual seeks to force JPMorgan to turn over more than $4 billion in deposits.

Lawyers for the FDIC immediately asked Walrath to certify her ruling on their motion for appeal. She declined to do so but said she would accept briefs from the FDIC and WaMu on the request for an appeal.

In a related development, Walrath granted a request by Washington Mutual for authorization to examine records of JPMorgan to investigate potential claims based on alleged misconduct by JPMorgan that led to a federal lawsuit in Texas.

Washington Mutual stakeholders allege in the Texas lawsuit that JPMorgan engineered a plan to damage Washington Mutual's banking subsidiaries so it could buy them on the cheap. Among other things, the plaintiffs allege that JPMorgan engaged in sham negotiations to gain confidential information from Washington Mutual, and that it misused and leaked that information to gain an unfair advantage in obtaining Washington Mutual Bank's assets at "fire sale" prices.

The FDIC seized the banking assets of Seattle-based Washington Mutual last year, then immediately sold them to JPMorgan for $1.9 billion, a price that WaMu claims was much too low.

Washington Mutual filed a lawsuit against the FDIC in March in U.S. District Court in Washington, D.C., arguing that if WaMu's assets had been liquidated properly by the FDIC in receivership, they would have been worth more than $1.9 billion. The lawsuit also argues that the FDIC improperly denied Washington Mutual's proof of claims.

In a separate lawsuit that is part of the Delaware bankruptcy case, Washington Mutual claims that JPMorgan has refused to turn over billions of dollars in deposits that are part of its bankruptcy estate. JPMorgan has filed a countersuit claiming the money was included in the assets sold to it by the FDIC.

Thomas Califano, an attorney for the FDIC, argued Wednesday that federal law limits jurisdiction regarding assets in which the FDIC, as receiver of a failed financial institution, claims ownership interest to the district court in Washington or the district in which the failed institution is located.