JPMorgan Near Tax Refund Deal with FDIC: Report

Wednesday, 24 Mar 2010 08:24 AM

 

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JPMorgan Chase is closing in on a deal with the Federal Deposit Insurance Corp (FDIC) that could result in a tax refund of about $1.4 billion for the bank, the Wall Street Journal reported, citing people familiar with the talks.

JPMorgan was not available to comment on the report.

As part of a larger settlement with Washington Mutual's bondholders, JPMorgan can claim $1.4 billion of funds in the FDIC receivership to protect itself against exposure to mortgages that WaMu serviced, the Journal said.

Washington Mutual, which is tied to the biggest bank failure in U.S. history, is eligible to receive about $5.6 billion in tax refunds as part of a court settlement.

WaMu was seized by the FDIC in 2008 and was later sold to JPMorgan for $1.9 billion.

On March 12, Washington Mutual agreed to split the two potential tax refunds with JPMorgan and the FDIC.

WaMu agreed to receive $900 million of a $2.6 billion expected return, with the rest going to JPMorgan.

A second $2.6 billion return will be bring in $1.04 billion for Washington Mutual with the rest going to the FDIC.

© 2014 Thomson/Reuters. All rights reserved.

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