Washington Mutual Inc
Washington Mutual Inc attorneys argued in a bankruptcy court that records and depositions show the disputed money was on deposit at the holding company's banks when they were seized last year in the biggest bank failure in U.S. history.
Attorneys for JPMorgan & Chase Co
The judge, Mary Walrath, said she would take the issue under advisement and issue a decision at a later date.
The Federal Deposit Insurance Corp seized the banking operations of Seattle-based Washington Mutual in September 2008 and immediately sold them to JPMorgan for $1.9 billion. The thrift's holding company filed for bankruptcy protection the next day.
At issue on Thursday and subject to hundreds of pages of briefs and hours of depositions was more than $4 billion in deposits that Washington Mutual Inc said was held by Washington Mutual Bank fsb and Washington Mutual Bank.
Not a single witness, not a single witness says the most obvious and fundamental thing, that the funds belong to JPMorgan, said David Elsberg, an attorney with Quinn Emanuel which represents Washington Mutual Inc.
JPMorgan attorneys argued that they have not had an opportunity to question top decision makers at Washington Mutual Inc about what they said were questionable transactions, some taken on the eve of the bank failure.
Robert Sacks an attorney with Sullivan and Cromwell which represents JPMorgan, described other transactions by Washington Mutual in which deposits were recharacterized as loans and back to deposits in the space of days for regulatory reasons.
He questioned why a $3.67 billion deposit was moved between two banks owned by the holding company.
Why did they move that money. How do we know it was not a capital contribution? We haven't been able to talk to the people who moved that money, said Sacks.
The FDIC also weighed in, arguing against the request for summary judgment that would force JPMorgan to turn over the funds. The attorney for the agency said it could, as receiver of the banks, demand a return of the deposit to itself under the agreement to sell the banking operations to JPMorgan.
The judge will also have to weigh the value of competing claims which could offset part of the value of the deposit.