COMPLAINT | JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. FEDERAL DEPOSIT INSURANCE CORPORATION et al | JPMorgan Chase (JPM) has sued the Federal Deposit Insurance Corp. over Washington Mutual's legal liabilities

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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. FEDERAL DEPOSIT INSURANCE CORPORATION et al | JPMorgan Chase (JPM) has sued the Federal Deposit Insurance Corp. over Washington Mutual’s legal liabilities

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION v. FEDERAL DEPOSIT INSURANCE CORPORATION et al | JPMorgan Chase (JPM) has sued the Federal Deposit Insurance Corp. over Washington Mutual’s legal liabilities

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION,
1111 Polaris Parkway,
Columbus, Ohio 43240,
Plaintiff,

v.

FEDERAL DEPOSIT INSURANCE
CORPORATION, in its capacity as
Receiver for Washington Mutual Bank,
550 17th Street N.W.,
Washington, D.C. 20429,

-and-

FEDERAL DEPOSIT INSURANCE
CORPORATION, in its corporate capacity,
550 17th Street N.W.,
Washington, D.C. 20429,
Defendants.

 .
NATURE OF ACTION

1. JPMC brings this action to recover substantially in excess of a billion
dollars in indemnification from the Federal Deposit Insurance Corporation in its capacity as
Receiver for Washington Mutual Bank (“WMB”) (the “FDIC-Receiver”) under the terms of the
Purchase & Assumption Agreement between JPMC, the FDIC-Receiver, and the Federal Deposit
Insurance Corporation in its corporate capacity (“FDIC-Corporate”, and collectively with FDICReceiver,
the “FDIC”), dated as of September 25, 2008 (the “P&A Agreement” or “P&A”),
pursuant to which JPMC acquired from the FDIC-Receiver essentially all of the assets and
assumed certain liabilities of WMB. As described more fully below, the FDIC-Receiver has
wrongly refused to acknowledge or honor its expansive indemnification obligations to JPMC
under the P&A Agreement and in doing so has subjected JPMC to massive liability.

2. The FDIC’ s indemnification obligations that are the subject of this action
are a matter of contract. They are promises that the FDIC made to JPMC to induce JPMC to
enter into the P&A Agreement when WMB failed in September 2008, in the largest bank failure
in this nation’s history. By entering into the P&A Agreement and agreeing to assume WMB’s
enormous deposit liabilities, JPMC protected the FDIC from potentially unprecedented liability
and helped ensure the stability of the country’s banking system by enabling the former WMB
branches to remain open for business as usual following the failure.

3. The FDIC-Receiver bears the primary responsibility to indemnify JPMC.
Its indemnification obligations to JPMC are paid out of existing assets held in the WMB
receivership, not borne by taxpayers or depositors. Following resolution of JPMC’s
indemnification claims, any amounts remaining in the WMB receivership would be paid out to
WMB creditors, primarily to holders of WMB senior debt, a group currently constituted mainly
of hedge funds and similar entities that have bought up WMB senior debt for pennies on the
dollar. FDIC-Corporate acts as a guarantor of the FDIC-Receiver’s indemnification obligations
to JPMC under the P&A Agreement; however, JPMC believes that the FDIC-Receiver has
sufficient assets to meet the existing indemnification obligations that are the subject of this action
and that, if the FDIC-Receiver does so, it will not be required to call upon FDIC-Corporate’s
guarantee.

4. The FDIC’ s indemnification obligations that are the subject of this action
are in addition to the obligations that the FDIC has to indemnify JPMC for any liability it may
incur with respect to the multi-billion dollar mortgage-backed securities repurchase claims being
asserted in the Deutsche Bank v. FDIC action in this Court (Civil Action No. 09-cv-1656), for
the various tax claims that are already the subject of other litigation between JPMC and the
FDIC, and for other claims in litigation where JPMC has asserted third-party claims against the
FDIC. The indemnification obligations that are the subject of this action are not exhaustive of
JPMC’ s indemnification rights under the P&A Agreement, and JPMC reserves the right to
demand indemnification from the FDIC under the P&A Agreement for matters that are not the
subject of this complaint.

[…]

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