A lawyer for Washington Mutual Inc. reported "momentum" Thursday 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 reached soon among Washington Mutual, Wamu's former parent; Wamu's new owner, JPMorgan Chase & Co., and the Federal Deposit Insurance Corp.
The three have been wrestling over about $4 billion in cash that was in Washington Mutual's accounts at its bank unit when the thrift was seized and sold to JPMorgan Chase in September 2008.
Investors have been hoping the talks would yield a settlement that would mean payment sooner rather than later on billions of dollars worth of debts left in the wake of Wamu's failure.
The thrift's seizure triggered a flurry of lawsuits, some aimed at JPMorgan Chase, 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, an attorney at 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 would clear away the cloud of litigation over the assets left in the wake of Wamu's collapse.
Besides the bank account cash, billions of dollars worth of tax refunds are on the way. JPMorgan Chase, 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 U.S. Bankruptcy Court in Wilmington, Del., where a judge was scheduled to weigh the FDIC's arguments for claiming the bank account cash.
Washington Mutual and others involved in negotiations agreed to postpone the court fights for continued talks, Rosen said.
Judge Mary Walrath is already mulling a request from Washington Mutual for a court order requiring JPMorgan Chase to surrender the contents of Washington Mutual's bank accounts to the former parent company.
