Former Washington Mutual executives have agreed to pay $208.5 million to settle a lawsuit launched by a group of investors after the bank's failure in 2008, the largest ever of its kind.
The bank leaders, among them former Washington Mutual chairman Kerry Killinger, ex-chief operating officer Stephen Rotella and the company’s former home loans president David Schneider, will pay a total of approximately $105 million, said the document presented Thursday at a federal court in Seattle.
According to the preliminary agreement, investment banks and brokerages with ties to Washington Mutual including Goldman Sachs, Morgan Stanley, Credit Suisse, UBS and Deutsche Bank will contribute $85 million. The auditing firm Deloitte & Touche will pay $18.5 million.
In exchange, the plaintiffs, led by Canada's Ontario Teachers Pension Plan board, agreed to withdraw their complaint made in an attempt to recover some of the hundreds of millions of dollars of losses they blamed on the bank's misleading and false claims.
On September 25, 2008, the Federal Deposit Insurance Corporation seized Washington Mutual's flagship bank in Seattle and facilitated its sale to JPMorgan Chase for $1.9 billion.
JPMorgan took over the assets and liabilities of the two banking subsidiaries of the group, but the deal excluded the capital (with a market value of $2.9 billion) and the debt supported by the holding company ($14.4 billion).
The settlement agreement is still subject to court approval.