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JPMorgan sues FDIC to recover $1bn over Washington Mutual claims

JPMorgan Chase & Co has filed a lawsuit against the Federal Deposit Insurance Corporation (FDIC) in federal court, claiming that the agency must compensate over $1bn for not assuming legal claims cropping from its acquisition of Washington Mutual's assets.

The lender acquired Washington Mutual’s banking operations at the encouragement of regulators, who expected that such a deal would help stabilize the banking system during the financial crisis.

JP Morgan is now seeking a part of $2.7bn remaining in the receivership with the FDIC, which comprises $1.88bn reimbursed by the bank for Washington Mutual’s branches and deposits.

Based on the terms of the deal, an FDIC receivership "broadly agreed to indemnify JPMC both for liabilities JPMC did not assume and for numerous other matters," Reuters reported citing the bank’s 24-page lawsuit filed in US District Court for the District of Columbia.

"They are promises that the FDIC made to JPMC to induce JPMC to enter into the…agreement when WMB failed in September 2008, in the largest bank failure in this nation’s history," the lawsuit adds.