MTD Denied | FDIC has to Face a $10 Billion Lawsuit Tied to the Failure of Washington Mutual Bank

FDIC has to face $10 billion WaMu-related lawsuit

(Reuters) – A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.

The judge refused the FDIC’s request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.

Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.

The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.

The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.

A Senate committee report this year said WaMu’s mortgage securitization was “polluting the financial system” with bad home loans and partly to blame for the 2008 financial crisis.

The FDIC argued it should be dismissed from the lawsuit and Deutsche Bank should bring its claims against JPMorgan, which assumed WaMu’s liabilities as well as assets.

JPMorgan has denied it assumed any WaMu liabilities.

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Comments
6 Responses to “MTD Denied | FDIC has to Face a $10 Billion Lawsuit Tied to the Failure of Washington Mutual Bank”
  1. Ron Moss says:

    FDIC also said they would not accept IndyMac liabilities but shifted them on to OneWest, But how do you pick a number of punitive damage for a billionaire to discourage him from efer wanting to return to the scene of the crime and consdiser ever recommoting the same crime again?

  2. Beth A. says:

    They want it ALLLLLLLLL….until there is some financial or criminal liablity attached to it, that is.

  3. Up to last summer 2010, Chase and the FDIC had NOT signed the final purchase agreement. I believe that is when the lawsuit started also. It was to be signed in August 2010…but nothing was ever said nor can be found on internet if they did finalize the agreement…..Does any one know? The question at the time was…if it was not signed…did Chase have the right to foreclosure on mortgages from WaMu…..this all is hanging in mid air for those who had WaMu mortgage.

  4. PJ says:

    These regulators, judges, lawyers pretend not to know their own laws and rules — Simply put, Chase bought it – Chase should eat it because Chase bank has done the exact same thing to the little guy ON MAIN STREETS OF AMERICA and gets away with it each and every time — Denying any liability — NOT SO — UNDER THE FTC HOLDER RULE 16CFR433, WHICH STATES THAT THE ASSIGNEE (CHASE BANK) IS LIABLE FOR ANY CLAIMS THAT CAN BE ASSERTED AGAINST THE SELLER — NOW PAY ME YOU BASTARD!

  5. Ron Moss says:

    In my casae. a letter from a FDIC lawyer said they would not pay even if the state judge said they shoulg as they took over for IndyMac. How they got the authority over our state Judge I don’t know But they seem to think they had.

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