'JPMorgan accused of pulling down Lehman'
According to a report, financial services major JPMorgan, which rescued two troubled banks within a span of seven months, has now been accused of putting the final nail on Lehman Brothers.india Updated: Oct 05, 2008 18:58 IST
Financial services major JPMorgan, which rescued two troubled banks within a span of seven months, has now been accused of putting the final nail on Lehman Brothers, says a media report.
"JP Morgan has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle," the Sunday Times reported.
The giant American bank is alleged to have frozen US$ 17 billion (9.6 billion) of cash and securities belonging to Lehman on the Friday night before its failure, the daily added.
Lehman Brothers filed for bankruptcy two days later on Monday, triggering a series of collapse of financial institutions in US and Europe.
The allegations were raised in a filing at the bankruptcy court in New York, lodged late last week, the newspaper said.
"The creditors committee understands that LBHI [Lehman Brothers Holding Inc] had at least $17 billion in excess assets which were held at JPMC [JP Morgan Chase] on the Friday going into the weekend before its bankruptcy filing," Sunday Times said quoting documents.
"The creditors committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead 'froze' LBHIs account. In freezing LBHIs assets, JPMC was purportedly holding all of LBHIs assets as a potential offset against any claims JPMC may have had against LBHI," the documents said.
Before Lehman's bankruptcy JPMorgan had agreed to buy investment bank Bear Sterns and had paid US$ 2.3 billion. Later in September it also agreed to purchage Washington Mutual's banking assets for 1.