JPMorgan to Receive $645 Million in Deal to End WaMu Dispute

  • Lender announces settlement agreement with Deutsche Bank, FDIC
  • $6 billion in mortgage-backed securities were focus of suit

JPMorgan Chase & Co., the biggest U.S. bank, will be paid $645 million from a receivership estate to end a dispute over who was responsible for toxic securities created by a failed bank acquired during the financial crisis.

The agreement with Deutsche Bank AG and the Federal Deposit Insurance Corp. was signed Friday, New York-based JPMorgan said in a regulatory filing. It resolves claims among the three parties over more than $6 billion in securities backed by flawed Washington Mutual Inc. mortgages.

JPMorgan Chief Executive Officer Jamie Dimon has said that he would have demanded a much lower price for Washington Mutual given the unexpected legal costs from that deal and the acquisition of Bear Stearns Cos. The takeovers, done during the crisis, saddled the bank with billions of dollars of litigation and regulatory expenses.

JPMorgan sued the FDIC in 2013, claiming the agency was responsible for more than $1 billion in liabilities faced by the company as a result of its 2008 takeover of Washington Mutual’s bank. JPMorgan had argued that the FDIC agreed to shield it from liability tied to failures by Washington Mutual. JPMorgan said it will drop its claims and receive $645 million in cash.

The agreement is subject to judicial approval. A tentative deal was disclosed this month in a JPMorgan filing.

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