Federal Court Rejects JPMorgan Chase's Attempt to Push Claims by Former WaMu HELOC Customers onto FDIC

Cupertino, Calif., Nov 20, 2009 (PRNewsChannel.com via COMTEX) --
JPM | Quote | Chart | News | PowerRating -- In a victory for former home equity line of credit (HELOC) customers of Washington Mutual Bank ("WAMU") who have been harmed by Chases broad-based HELOC credit reductions and suspensions, a federal court on Thursday denied a motion by JPMorgan Chase Bank (NYSE:JPM) that sought to require former WaMu customers to sue the F.D.I.C.even in those instances where Chase itself is alleged to have acted illegally.

Cupertino homeowners Jeffrey and Jenifer Schulken, who originated their HELOC with WaMu, had their line suspended by Chase earlier this year when Chase claimed the couples finances would not allow them to make their HELOC payments. This is despite the fact the Schulkens enjoy excellent credit scores, maintain steady incomes, always make their payments on time and even pay extra toward the principal. The Schulkens responded by filing a lawsuit seeking class action status on behalf of all Chase customers who have had their HELOCs suspended or reduced unlawfully.

Chase responded by filing a motion to dismiss that argued it had no responsibility to former WaMu borrowers. According to Chase, although it purchased WaMus assets, it supposedly did not acquire any liabilityeven for its own misconduct. Chases unprecedented position was fairly simple: Chase can harm former WaMu customers with impunity, and anyone who suffers damages should have to go sue the F.D.I.C., says the Schulkens attorney Jay Edelson, whose law firm, KamberEdelson LLC, has filed similar class actions against Chase, WaMu, Wells Fargo and Citibank. As Edelson explains, Under Chases reasoning, it could seize former WaMu borrowers homes by force and throw people out on the street, and the only recourse would be for the former WaMu customers to sue the F.D.I.C. The court saw through Chases arrogant and frankly scary position.

Chase purchased WaMu from the F.D.I.C. in September 2008 for $1.9 billion. Through creative purchase accounting, experts have forecast that Chase will realize a $29 billion windfall as a result of the acquisition.

Its have your cake and $29 billion too, continued Edelson. Chase was supposed to use the bailout money to lend to consumersnot to freeze up credit lines. More than anything, it shows that Chases attitude is that no matter how poorly it behaves, the government should be on the hook for its improper acts. Its as if the bailout taught it nothing.

Edelson had called upon Congress to act, a movement that is gaining significant support. Call your Congressman and ask them where the bailout money went. It isnt being used to get credit flowing, thats for sure.

Edelson is joined in the suit by KamberEdelson (http://www.kamberedelson.com) attorneys Evan Meyers, Steven Lezell and Irina Slavina.

About KamberEdelson: Jay Edelson testified before the U.S. Senate in 2008 in connection with the contaminated pet food recall, in which his law firm was lead counsel and achieved a result in a settlement of over $24 million. He has a reputation for bringing and winning high profile class action lawsuits. Just last year, Edelson settled a nationwide case involving lead paint contamination with Thomas the Tank Engine & Friends Wooden Railway childrens toys that was valued at over $30 million.

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