zerohedge.com / by Tyler Durden / 12/18/2013 08:15 -0500
There is a saying: “don’t buy the hand that feeds you” but there is nothing in popular aphorism literature about suing the hand that bails you out. Which is precisely what JPM did overnight when it sued the Federal Deposit Insurance Company, claiming the agency was responsible for over $1 billion in liabilities assumed by the bank as part of its takeover of Washington Mutual in 2008. Of course, having been the subject of a relentless battery of lawsuits by every US agency imaginable, many were wondering when JPM would strike back, or rather if it would have the temerity to sue the same government that bailed it out with billions of direct injections and even more billions in FDIC-subsidized bond issuance. The answer is yes, and as JPMorgan alleged in the complaint, the FDIC agreed to shield it from liability from lawsuits claiming failures by Washington Mutual. JPMorgan said it took on only limited liabilities in its purchase of the Seattle-based bank’s assets. What next: Jamie Dimon sues the Fed for forcing it to acquire Bear Stearns’ assets at the firesale price of $2 $10 per share, in which the bank assumed Bear’s assets if not so much its liabilities – after all there was a government to bail it out for that.
“The FDIC’s indemnification obligations that are the subject of this action are a matter of contract,” the New York-based bank said in its complaint. “They are promises that the FDIC made to JPMC to induce JPMC” to buy Washington Mutual’s assets, it said.
Greg Hernandez, an FDIC spokesman, didn’t immediately return voice-mail and e-mail messages after regular business hours seeking comment on the bank’s allegations. Brian Marchiony, a JPMorgan spokesman, declined to comment on the case.