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December 18, 2013

JPMorgan sues FDIC for more than $1bn

“JPMorgan Chase sued the Federal Deposit Insurance Corporation on Tuesday, striking back against the government weeks after agreeing to pay $13bn to resolve claims that it mis-sold mortgage securities.

The largest bank in the US said it was trying “to recover substantially in excess of a billion dollars” from the FDIC, which managed the receivership of Washington Mutual after the bank failed during the crisis and then sold most of its assets to JPMorgan.

WaMu packaged billions of dollars of bad mortgages into securities and sold them to institutional investors before the crisis. That mis-selling rebounded on JPMorgan, which faced fraud claims from the government over WaMu’s behaviour, which it later settled as part of its record $13bn deal with the Department of Justice and other agencies.

The FDIC declined to comment. Officials at the agency, which guarantees bank deposits against failure and regulates banks, believe JPMorgan took on WaMu’s legal liabilities as part of its acquisition and does not have a claim over $2.7bn in assets that remain in the receivership, according to people familiar with the matter.

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Read full Financial Times article here

 
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