Two former subsidiaries of Washington Mutual Bank (WaMu) have agreed to a $26 million settlement that ends a lawsuit brought by investors.
Reuters reports that the settlement comes before the lawsuit was set to go to trial on Sept. 17. The investors – which include the Boilermakers National Annuity Trust, Doral Bank Puerto Rico, the Policemen's Annuity and the Benefit Fund of Chicago – alleged that WaMu deliberately misled them on the quality of loans that backed mortgage-backed securities. The investors initially sought $558 million in damages from WaMu Asset Acceptance Corp. and WaMu Capital Corp.
‘While this settlement by no means compensates investors for the full amount of their damages, we believe it is a good result given the bankruptcy of WaMu and limited funds available,’ says Steve Toll, an attorney for the plaintiffs.
WaMu's collapse in 2008 was the largest bank failure in U.S. history. WaMu's assets were subsequently purchased by JPMorgan Chase & Co. for $1.9 billion.
