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JPMorgan blamed for Lehman collapse in court documents
2008-10-05
LONDON (AFP) - US bank JPMorgan Chase stands accused of precipitating the collapse of American investment bank Lehman Brothers by freezing Lehman assets days before it filed for bankruptcy protection, the Sunday Times reported. Citing documents filed with a New York bankruptcy court late last week, the newspaper said that Lehman creditors have accused JPMorgan of freezing 17 billion dollars (12.3 billion euros) in cash and securities on Friday, September 12. Lehman filed for bankruptcy the following Monday. "The creditors' committee understands that LBHI (Lehman Brothers Holding Inc.) had at least 17 billion dollars in excess assets which were held at JPMC (JPMorgan Chase) on the Friday going into the weekend before its bankruptcy filing," the court documents reportedly allege. "The creditors' committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead 'froze' LBHI's account. "In freezing LBHI's assets, JPMC was purportedly holding all of LBHI's assets as a potential offset against any claims JPMC may have had against LBHI." The documents continued to say that "as a result of JPMC's actions, LBHI suffered an immediate liquidity crisis, that could have been averted by any number of events, none of which transpired." In a statement to the Sunday Times, JPMorgan described the allegations as "unfounded conjecture." Lehman Brothers -- which was America's fourth-biggest investment bank -- was the biggest name in international finance to fall prey to the credit crunch when it collapsed last month, though several others have been nationalised, or required some other form of government intervention since. Last week, lawmakers in Washington finally approved a 700-billion-dollar rescue package after much political wrangling, while European governments were forced to ride to the rescue of several major European banks. Britain announced Monday the nationalisation of Bradford & Bingley, coinciding with the 11.2-billion-euro bailout of banking and insurance group Fortis by the Belgian, Dutch and Luxembourg governments. A day later, Belgium, France and Luxembourg joined together to inject 6.4 billion euros into banking group Dexia and in Germany Hypo Real Estate was saved by a government-backed rescue move.
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