Former Washington Mutual (WaMu) executives have agreed to pay US$208.5 million to settle a lawsuit launched by a group of investors after the bank’s failure in 2008, the largest ever of its kind.
The bank leaders, among them former Washington Mutual chairman Kerry Killinger, former chief operating officer Stephen Rotella and the company’s former home loans president David Schneider, will pay a total of approximately US$105 million, according to the document presented on Thursday at a federal court in Seattle.
According to the preliminary agreement, investment banks and brokerages with ties to Washington Mutual — including Goldman Sachs, Morgan Stanley, Credit Suisse, UBS and Deutsche Bank — will contribute US$85 million. The auditing firm Deloitte & -Touche will pay US$18.5 million.
In exchange, the plaintiffs, led by Canada’s Ontario Teachers Pension Plan board, agreed to withdraw their complaint made in an attempt to recover some of the hundreds of millions of dollars of losses they blamed on the bank’s misleading and false claims.
On September 25, 2008, the Federal Deposit Insurance Corp seized Washinton Mutual’s flagship bank in Seattle and facilitated its sale to JPMorgan Chase for US$1.9 billion.
JPMorgan took over the assets and liabilities of the two banking subsidiaries of the group, but the deal excluded the capital (with a market value of US$2.9 billion) and the debt supported by the holding company (US$14.4 billion).
The settlement agreement is still subject to court approval.
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