FDIC may owe JPMorgan Chase billions

The JPMorgan Chase building is seen in New York City.

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Kai Ryssdal: Two years ago, the financial crisis brought us the biggest bank failure we'd ever seen. Washington Mutual going broke and being bought by JPMorgan for less than $2 billion. Now, it seems JPMorgan Chase is getting ready to ask the FDIC for its money back -- three times its money back, actually.

Marketplace's Alisa Roth reports.


Alisa Roth: JPMorgan Chase wants the FDIC to pay billions of dollars in claims from lawsuits related to Washington Mutual's failure. The deal JPMorgan signed when it took over the dying bank could hold the FDIC responsible for those liabilities. It's not clear whether the FDIC will have to absorb those losses.

William Isaac was chair of the FDIC in the 1980s. He says the agency usually has a pretty good idea of how much a failure will cost.

William Isaac: They look at the assets and try to figure out what they're worth, what kind of recovery they're going to get on those assets, how long it's going to take and they also make estimates about how good legal claims might be.

So he thinks it's unlikely all the bank failures will end up costing much more than the FDIC has estimated. And he thinks the pace of failures will slow down, as long as the economy doesn't go into a double dip.

Karen Petrou is a banking analyst. She thinks given the number of banks on the watch list, more failures are inevitable -- as are more lawsuits demanding money from the FDIC.

Karen Petrou: There are always lawyers, there's always going to be litigation. But I don't think any of it as game changers in terms of the FDIC's cost of recovery or redefining taxpayer risk for the banking crisis.

In any case, JPMorgan has made out pretty well in spite of the lawsuits. Among other things, it's said interest on Washington Mutual loans could bring in as much as $25 billion. And it got a network of bank branches across the country.

In New York, I'm Alisa Roth for Marketplace.

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