WaMu may reach deal soon

City A.M. Reporter
WASHINGTON Mutual could reach agreement with JPMorgan Chase & Co and a government agency over a disputed $3.7bn (£3.3bn) bank deposit in the next week, the bankrupt company’s attorney told a court yesterday.

Washington Mutual was in court to try to resolve a dispute centering on one of its largest potential assets, billions of dollars that the holding company said was a deposit it had at its banks.

The deposit was seized along with the company’s lending operations in September 2008 in the biggest bank failure in US history.

Washington Mutual’s attorney, Brian Rosen of Weil, Gotshal & Manges, asked the court to adjourn the hearing for one week to give the parties more time for talks. The parties plan to return to court on 12 March.

He said the US Federal Deposit Insurance Corp and JPMorgan requested the added time but Washington Mutual was reluctant, an indication that the company might expect a favourable ruling.

He also said there was “momentum” to the negotiations, and yesterday’s hearing was delayed for an hour while the parties held talks in the hallway outside the courtroom.

Bankruptcy Judge Mary Walrath granted the request to postpone the hearing for one week.

During the height of the 2008 financial crisis, Washington Mutual’s banks were seized and immediately sold by the FDIC to JPMorgan for $1.9bn. The Seattle-based holding company filed for bankruptcy the next day.

JPMorgan has described Washington Mutual’s book-keeping as a “shell game” and said the money might have been a capital contribution that allowed the bank to meet regulatory requirements.