Washington Mutual last week announced that it might get an additional $2.6 billion in tax refunds, due to a law signed by President Obama last month.
On Nov 6, 2009, President Obama signed a law that extended the temporary net operating loss carryback period to five years from two years previously. The purpose of the longer carryback period is to allow businesses to raise the cash needed by carrying back losses to prior-profitable years and generating a refund for those years.
Washington Mutual is also fighting JP Morgan Chase (JPM) in the court for $4 billion of deposits and several billions in other assets. The attorneys of both the companies have laid claims to the disputed assets following JPMorgan’s acquisition of the failed thrift’s assets last year.
Last month, Washington Mutual sought permission from the federal court to question third parties − including some regulators and banks − that were connected with the Washington Mutual seizure. The company carries $8.3 billion of liabilities.
Washington Mutual, one of the largest U.S. savings and loans organizations and heavily exposed to bad mortgage investments at the heart of the financial crisis, was closed by regulators who had orchestrated a last-minute sale of its assets to JPMorgan Chase for $1.5 billion on Sep 25, 2008.
The tax refund will help the failed bank to gain cash, which can be utilized to resolve various legal disputes surrounding the company’s collapse last year, making way for a settlement of the bankruptcy case.
Read the full analyst report on “JPM”
Zacks Investment Research
