Lehman creditors agree to drop litigation to force Geithner to testify on JPMorgan dispute

Timothy Geithner

Lehman Brothers Holdings, Inc., has terminated litigation that would force Treasury Secretary Timothy Geithner to testify regarding an $8.6 billion collateral dispute with JPMorgan Chase & Co.

The creditors told U.S. District Judge Reggie Walton in Washington, D.C., that Geithner had provided written answers to their questions, adding that they had no further requests of Geithner, Reuters reports.

Geithner was president of the New York Federal Reserve Bank when Lehman filed bankruptcy in 2008. In 2010, the company filed a lawsuit against its former main bank JPMorgan alleging that the financial giant had siphoned off $8.6 billion of collateral shortly before Lehman filed bankruptcy.

Lehman was seeking details related to phone calls that Geithner made to former Lehman CEO Richard Fuld and JPMorgan CEO Jamie Dimon before the bankruptcy. Lehman creditors asked a judge in February to subpoena Geithner to force him to give a deposition related to the lawsuit, according to Bloomberg.

The Department of Treasury refused to allow Geithner to meet with Lehman creditors in person, saying that he had already spoken about the firm’s fall “on multiple occasions before Congress and other government bodies,” Bloomberg reports.

Shortly after Lehman filed the $8.6 billion suit against the financial giant, JPMorgan sued Lehman, alleging that the company had defrauded JPMorgan into making a $70 billion loan to Lehman’s brokerage around the time the company filed bankruptcy.

Lehman’s bankruptcy was the largest filing in history with over $600 billion in debt. It is in the process of selling assets to pay creditors after exiting bankruptcy court this year.

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