JPMorgan Chase & Co sued the Federal Deposit Insurance Corp (FDIC), claiming the agency is responsible for more than US$1 billion in liabilities faced by the bank as a result of its 2008 takeover of Washington Mutual Inc (WaMu).
JPMorgan said in the complaint filed on Tuesday in federal court in Washington that 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.
“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.
JPMorgan said it is the subject of numerous lawsuits, including claims by buyers of securities backed by faulty Washington Mutual residential loans. The bank is seeking unspecified damages and a court order declaring that the FDIC is responsible for the claims against Washington Mutual.
The complaint follows JPMorgan’s US$13 billion settlement last month to resolve US Department of Justice probes of its sale of mortgage bonds.
The bank agreed not to pursue reimbursement from the FDIC for bad loans issued by WaMu. During the financial crisis, the FDIC seized Washington Mutual’s banking operations and sold them to JPMorgan for US$1.9 billion.
Separately, JPMorgan plans to boost the number of junior investment bankers it employs by about 10 percent and provide them with “protected weekends” to reduce their workload, a person familiar with the matter said.
Jeff Urwin, the New York-based company’s global head of investment banking, announced the changes on an internal conference call on Tuesday, said the person, who did not say how many people would be affected and asked not to be identified because the new policies are not public.
Junior investment bankers, defined as analysts and associates, will get one weekend a month starting in January, when they will not be expected to work either from the office or home or to answer calls or e-mails, the person said.
Employees will be allowed to choose which weekends are protected and can defer them to future months.
All of the major Wall Street firms are planning to increase investment-banking staff next year, according to Jeanne Branthover, the head of financial-services recruitment at Boyden Global Executive Search in New York.
They are also trying to protect their best employees from poaching as average pay at the biggest banks declines.
“Business is better and they’ve stayed lean for so long,” Branthover said. “People are burned out.”
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