NEW YORK, June 24 (Reuters) - A Delaware bankruptcy judge on Wednesday maintained control over a dispute between the failed thrift Washington Mutual Inc (WAMUQ:$0.1010,$-0.0139,-12.10%) and JPMorgan Chase & Co (JPM:$33.46,00$-0.11,00-0.33%) over billions of dollars of deposits.
Judge Mary Walrath also ruled that the Federal Deposit Insurance Corp, which is the receiver for Washington Mutual, may intervene in the case.
The judge noted a public interest in how deposits are disbursed, citing the FDIC's responsibilities under a federal law passed in the wake of the 1980s savings and loan crisis.
She rejected an argument by Washington Mutual lawyer Michael Carlinsky that the FDIC no longer had an interest in the case after selling the thrift's bank operations to JPMorgan. He said allowing intervention could cause "months and months and months of additional delay," hurting creditors.
Last Sept. 25, the FDIC seized the banking operations of Seattle-based Washington Mutual and immediately sold them to JPMorgan for $1.9 billion. The thrift's holding company filed for bankruptcy protection the next day. Washington Mutual remains by far the largest U.S. banking company to fail.
The holding company subsequently filed separate lawsuits. It sued the FDIC, contending that the $1.9 billion sale price was too low, and seeking more than $13 billion of damages. It also sued JPMorgan, claiming that the bank wrongfully withheld more than $4 billion of cash from the bankruptcy estate, and which it believes should be available for creditors.
Walrath concluded she has exclusive jurisdiction to decide what belongs to the estate, and rejected requests to put two of the adversary proceedings on hold or transfer the disputes to the Washington, D.C., federal district court where Washington Mutual sued the FDIC, the Associated Press said.
The main bankruptcy case is In re Washington Mutual Inc, U.S. Bankruptcy Court, District of Delaware (Wilmington), No. 08-12229. The lawsuit against the FDIC is Washington Mutual Inc v. Federal Deposit Insurance Corp, U.S. District Court for the District of Columbia, No. 09-00533. (Reporting by Jonathan Stempel)
