Paging Judge Judy: JPMorgan, FDIC in WaMu tax flap

Paging Judge Judy: JPMorgan, FDIC in WaMu tax flap
The Wall Street giant wants a $1.4B tax refund from the bank it rescued. The regulator says TARP recipients aren't entitled to such refunds
APR 16, 2010
Federal regulators are opposing a proposed $1.4 billion tax refund for JPMorgan Chase & Co. The tax benefit has become an issue a year and a half after the Wall Street titan galloped in to buy the assets of Washington Mutual Inc. when it collapsed under bad mortgage loans and became the biggest bank ever to fail in the U.S. The Federal Deposit Insurance Corp. seized Seattle-based Washington Mutual and sold its bank assets to JPMorgan for $1.9 billion. JPMorgan has been involved in the bankruptcy reorganization proceeding for Washington Mutual's holding company, and had reached a compromise earlier this month with the FDIC. Under that accord, JPMorgan agreed to turn over about $4 billion in disputed WaMu deposit accounts to Washington Mutual in return for a portion of the tax refunds expected from the fallen bank's prior operating losses. JPMorgan would get the right to the $1.4 billion and creditors of the WaMu holding company would get the most of the remaining $2.7 billion refund. Under economic stimulus legislation enacted late last year, money-losing companies — in this case WaMu — can use their losses to get refunds of taxes paid in the previous five years. That was an expansion from the previous two-year allowance for calculating refunds. But the stimulus bill also bars any companies that received federal bailout aid — like JPMorgan — from collecting the tax refunds. New York-based JPMorgan, the No. 2 U.S. bank by assets behind Bank of America Corp., got $25 billion under the financial rescue program, which it has repaid to the government. A bankruptcy reorganization plan filed Friday by Washington Mutual for approval by a federal judge in Delaware affirms that JPMorgan has a right to the $1.4 billion. The FDIC disagrees. "The FDIC is working with all parties involved to reach agreement with respect to all terms of the proposed settlement," the agency said in a statement Monday. The plan and other documents submitted Friday "do not reflect the continuing discussions among the parties," it said. A JPMorgan spokesman, who declined to be identified by name, said "We are in meaningful discussions with the relevant parties." He declined further comment. The conflict was first reported Monday by The Wall Street Journal.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.