Geithner Should Be Ordered to Testify in JPMorgan Suit, Lehman Says
U.S. Treasury Secretary Timothy Geithner should to be ordered to give a deposition in Lehman Brothers Holdings Inc. (LEHMQ)’s lawsuit against JPMorgan Chase & Co., which alleged the bank siphoned $8.6 billion out of Lehman in the 2008 credit crisis, helping to cause its collapse, the defunct firm and its creditors said.
Lehman has a March 16 deadline for completing its fact finding in the case, after interviewing more than 200 witnesses, creditors said in a filing in U.S. District Court in Washington. Lehman is asking a federal judge to order Geithner to be interviewed by lawyers for the firm and its creditors. The Treasury Department “has for many months delayed and ultimately refused to allow the testimony of Secretary Timothy F. Geithner,” which is key to the case, they said.
The filing, e-mailed to Bloomberg, was confirmed by a Lehman official who declined to be named. The filing was made in person, the official said. It couldn’t be immediately confirmed in court records.
Geithner, at the time president of the Federal Reserve Bank of New York, discussed the collateral JPMorgan was demanding for its loans with Richard Fuld and James Dimon, Lehman’s and JPMorgan’s chief executive officers, in the week before Lehman’s bankruptcy, according to the filing. He also met with Dimon and Henry Paulson, then Treasury Secretary, to discuss “concerns” that Dimon was using the crisis to strengthen his bank at Lehman’s expense, they said.
The Treasury also has refused to let Paulson testify, creditors said. They would address the refusal separately, they said. Lehman’s official committee of creditors works closely with the defunct firm on its plans and lawsuits, it has said.
“Secretary Geithner has given public testimony about the failure of Lehman Brothers on multiple occasions before Congress and other government bodies,” said Anthony Coley, a Treasury Department spokesman, in an e-mail. “In this particular matter, Treasury and the Federal Reserve have cooperated extensively with the plaintiffs. Treasury and the Fed have provided thousands of pages of documents and arranged for depositions of numerous other witnesses. We have also offered to provide a written declaration from the Secretary in order to provide any additional information that the parties are seeking. Given all the available information, it is unclear why plaintiffs continue to insist on unnecessary depositions of current and former Treasury secretaries.”
Joseph Evangelisti, a JPMorgan spokesman, didn’t immediately respond to an e-mail seeking comment on Lehman creditors’ account of Dimon’s conversations with officials.
Lehman and JPMorgan this week got a judge’s approval to settle a $699 million dispute, with the bank returning that amount of the $8.6 billion to Lehman. In addition to the lawsuit, they are fighting over $6.3 billion in claims that the bank filed against the defunct firm.
The biggest U.S. bank, which lent $70 billion to Lehman’s brokerage around the time of the 2008 bankruptcy, sued Lehman back after the $8.6 billion suit, alleging Lehman defrauded its lender into making the loan. It has asked a judge to dismiss Lehman’s suit.
Lehman filed the biggest bankruptcy in U.S. history in 2008, listing $613 billion in debt.
The main case is In re Lehman Brothers Holdings Inc., 08- 13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The lawsuit is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at email@example.com