The nation’s largest lender was ordered Oct. 17 by Judge Stanton Wettick to release the draft lawsuit, along with the name of an employee who cooperated in the government’s probe of the bank, according to a Bloomberg report. The draft lawsuit and the name of the employee are being sought by lawyers for the Federal Home Loan Bank of Pittsburgh, who say the material could provide information useful in their own lawsuit against JPMorgan.
The FHLB took a $2.3bn hit on mortgage-backed securities it bought from JPMorgan, according to Bloomberg. However, those losses aren’t covered by JPMorgan’s recent $13bn settlement with the government, so FHLB is suing the big bank, along with credit ratings companies including Moody’s Investors Services, Bloomberg reported.
JPMorgan notified FHLB in November that it would try to block Wettick’s order to release the information. The bank’s lawyers say the draft lawsuit is a “confidential settlement communication” between JPMorgan and the federal government, and that providing such information to a third party would “chill the use of such materials in future settlement negotiations.”
FHLB’s lawyers aren’t buying it. “Given JPMorgan’s apparent deep desire to prevent it from ever seeing the light of day, it would not be at all surprising if the draft complaint is a much more detailed account of JPMorgan’s fraudulent conduct, and as such, far more enlightening than the statement of facts,” they said in a court filing.
JPMorgan Chase doesn’t want a draft of the government’s lawsuit against it to see the light of day. The big bank is asking a federal judge to keep secret a draft of the lawsuit, which resulted in the bank agreeing to pay a $13bn settlement over its sale of mortgage bonds.