By Tom Hals
This might help you out a bit. Long story short is that JPM AND FDIC bought a company that was worth at least 4 B in liquid assets for 1.8 B. you do the math. WAMU-ers are upset!
WILMINGTON, Del., Oct 22 (Reuters) - Washington Mutual Inc (WAMUQ.PK) told a federal judge on Thursday that JPMorgan should be forced to return more than $4 billion to the bankrupt holding company, whose bank was seized by regulators and sold to JPMorgan.
Washington Mutual attorneys argued in a bankruptcy court in Delaware that records and depositions show the disputed money was on deposit at the holding company's banks when they were seized last year in the biggest bank failure in U.S. history.
Washington Mutual Inc is seeking a summary judgment returning the money, while JPMorgan argued the issue needs to go to trial to determine basic facts, such as the nature of the funds.
Attorneys for JPMorgan & Chase Co (JPM.N) and federal regulators described Washington Mutual's bookkeeping as a "shell game" making it unclear whether the money was a deposit or some other form of transaction, such as a capital contribution.
The judge, Mary Walrath, said she would take the issue under advisement and issue a decision at a later date.
The U.S. Federal Deposit Insurance Corp seized the banking operations of Seattle-based Washington Mutual in September 2008 and immediately sold them to JPMorgan for $1.9 billion. The thrift's holding company filed for bankruptcy protection the next day.
At issue on Thursday, and the subject of hundreds of pages of briefs and hours of depositions, was more than $4 billion in deposits that the holding company said was held by its Washington Mutual Bank fsb and Washington Mutual Bank affiliates.
"Not a single witness, not a single witness, says the most obvious and fundamental thing, that the funds belong to JPMorgan," said David Elsberg, an attorney with Quinn Emanuel, which represents Washington Mutual Inc.
JPMorgan attorneys argued that they have not had an opportunity to question top decision makers at parent Washington Mutual about what they said were questionable transactions, some taken on the eve of the bank failure.
Robert Sacks an attorney with Sullivan and Cromwell which represents JPMorgan, described other transactions by Washington Mutual in which deposits were recharacterized as loans and back to deposits in the space of days for regulatory reasons.
He questioned why a $3.67 billion deposit was moved between two banks owned by the holding company.
"Why did they move that money? How do we know it was not a capital contribution? We haven't been able to talk to the people who moved that money," said Sacks.
The FDIC also weighed in, arguing against the request for summary judgment that would force JPMorgan to turn over the funds. The attorney for the agency said it could, as receiver of the banks, demand a return of the deposit to itself under the agreement to sell the banking operations to JPMorgan.
The judge will also have to weigh the value of competing claims that could offset part of the value of the deposit.
The main bankruptcy case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware (Wilmington), No. 08-12229. The adversarial suit over the deposits is Washington Mutual Inc and WMI Investment Corp v JPMorgan Chase Bank National Association, U.S. Bankruptcy Court for the District of Delaware, No. 09-50934. (Editing by Gerald E. McCormick)
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