We recently discussed in class how fall of the Lehman Brother's bank was one of the origin for the 2008 crisis. During early summer this year, Lehman had filed a suit against JPMorgran
Chase of "illegally siphoning $8.6 billion in collateral four business days before" Lehman's bankruptcy. But only few days ago, JPMorgan counter-sued Lehman Brothers stating Lehman committed fraud and left JPMorgan in more than $25 billion of unpaid loans which were backed by Lehman's most toxic securities.
According to the JPMorgan's statement, Lehman was provided with more than $70 billion on Sep 18, 2008 on the basis that Lehman will repay it back after it (Lehman) gets bought by Barclays Bank. JPMorgan further states that Barclays did not buy all of Lehman's debt that Lehman had guaranteed. Also, JPMorgan's countersuit includes higher Lehman executives which it accuses of accepting lucrative job offers at Barclays in return for allowing Barclays to "cherry-pick" the securities to be bought. A trial is not expected to start until 2012 and JPMorgan "is seeking unspecified damages".
It is interesting to see how banks have special relationships with each other and the fallout of those relationships in times of crisis. Whether or not JPMorgan or Lehman are guilty of their alleged crimes, this seems indicative of a murkier trend between large banks and their ability to conduct so much business behind the scenes.
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