Washington Mutual Sees `Momentum' In Talks With JP MorganFont size: A | A | A1:06 PM ET 3/4/10 | Dow Jones
By Peg Brickley
Of DOW JONES DAILY BANKRUPTCY REVIEW
WILMINGTON, Del. (Dow Jones)--A lawyer for Washington Mutual Inc. (WAMUQ) Thursday reported "momentum" in discussions aimed at settling disputes arising out of the largest banking collapse in U.S. history, that of Washington Mutual Bank, or WaMu.
Brian Rosen told a bankruptcy judge that a deal could be on the way soon among Washington Mutual, WaMu's former parent; WaMu's new owner, J.P. Morgan Chase & Co. (JPM) and the Federal Deposit Insurance Corp.
The three have been wrestling over some $4 billion in cash that was in Washington Mutual's bank accounts at WaMu when the thrift was seized and sold to J.P. Morgan in September 2008.
Investors have been hoping talks would result in a settlement that means payment sooner rather than later on billions of dollars worth of debts left in the wake of WaMu's failure.
The thrift's seizure has triggered a flurry of lawsuits, some aimed at J.P. Morgan, some at the FDIC and some at Washington Mutual Inc., arousing fear among investors that court fights could tie up the money for years.
Negotiations have "accelerated over the past few days," said Rosen, who is with Weil, Gotshal & Manges.
"There seems to be some momentum," he added. As a result, the former bank holding company agreed to push off scheduled court fights over the bank account cash.
His remarks fueled hopes a settlement will clear away the cloud of litigation surrounding the assets left in the wake of WaMu's collapse.
Besides the bank account cash, there are billions of dollars worth of tax refunds on the way. J.P. Morgan, Washington Mutual and the FDIC, as receiver for WaMu's creditors, have all laid claim to the money.
Rosen's remarks came at a session in the U.S. Bankruptcy Court in Wilmington, Del., where a judge was scheduled to weigh the FDIC's case for grabbing the bank account cash.
Washington Mutual and others involved in negotiations agreed to push off the court fights for continued talks, Rosen said.
Judge Mary Walrath is already mulling a request from Washington Mutual for a court order requiring J.P. Morgan to surrender the contents of Washington Mutual's bank accounts to the former parent company.
