SEATTLE (AP) - The trust responsible for distributing any remaining assets of Washington Mutual Inc. to unsecured creditors is suing the company's former directors and officers over a $500 million transfer that occurred just before Washington Mutual Bank was seized.
The Seattle Times reports that according to the lawsuit, Washington Mutual Inc. transferred the $500 million to Washington Mutual Bank in September 2008. Lawsuits filed in King County Superior Court and in bankruptcy court in Delaware on Tuesday claim the move was reckless, panicked and inexplicable: The money was already held in an account at the bank, so the transfer did not help shore it up.
Federal regulators then seized the bank - and the $500 million - and transferred it to JPMorgan Chase, which acquired WaMu. It was the largest bank failure in the nation's history.
The lawsuit says Washington Mutual Inc. should have kept the $500 million, because then it would have been out of regulators' reach and available to creditors and shareholders.
Barry Ostrager, a New York attorney who represents one of the defendants, former Washington Mutual chief financial officer Thomas Casey, told The Associated Press on Wednesday that the lawsuit is without merit.
