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WaMu Seeks to Investigate US Regulators, Others

AP
Wednesday, 16 Dec 2009 | 3:44 AM ET

Bank holding company Washington Mutual has asked a federal court for the power to make the Federal Reserve, the U.S. Treasury, and a long list of other parties turn over documents and witness interviews related to the bank's 2008 collapse.

Washington Mutual collapsed in September 2008 with about $307 billion in assets, and was acquired by JPMorgan for $1.9 billion in a deal brokered by the Federal Deposit Insurance Corp., or FDIC.

Seattle-based WaMu has said that price was much too low.

In papers filed Monday, WaMu said it wants to review e-mails and other materials to determine if suitor JPMorgan Chase undermined its value by disclosing confidential information that may have contributed to the nation's biggest bank failure ever.

WaMu has already launched a separate investigation of JPMorgan.

The request for a wider investigation was made in bankruptcy court, where a company can seek a so-called examiner who will conduct an independent investigation.

WaMu seeks the disclosures as a way to maximize its return to creditors of the holding company.

Lawyers for WaMu's holding company want to investigate regulators, rating agencies, other banks, JPMorgan employees who went to work for WaMu and other suitors, they said in papers filed with the U.S. Bankruptcy Court in Delaware.

The lawyers referred to accusations in a separate lawsuit, American National Insurance Co. v. FDIC, in which New York-based JPMorgan was said to have been "engaged in sham negotiations designed to elicit confidential information."

Lawyers said that lawsuit accuses JPMorgan of disclosing confidential information "to government regulators, rating agencies, media, and investors in an effort to harm WMI by driving down WMI's credit rating and stock price."

The lawyers allege JPMorgan used that information to convince regulators to seize the bank and sell off its assets so it could buy WaMu's assets at fire-sale prices.

A JPMorgan spokeswoman declined to comment on the filing.

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