WaMu Seeks Escrow Release

Washington Mutual, Inc. is seeking release of an escrow account (valued at more than $700 million in stock and cash) it set up six years ago as part of its acquisition of a California thrift formerly know as American Savings Bank.This escrow account was designed to reimburse ASB investors for an estimated $500 million in "goodwill" claims against the U.S. government. If the escrow is released, those investors, including the Federal Deposit Insurance Corp, would lose any chance of receiving restitution from the government for the breach of a goodwill contract made to ASB in the 1980s by the former savings and loans deposit insurance fund. So far, the long-running goodwill litigation has yielded only a partial summary judgment and WAMU contends the six-year escrow agreement expired as of Dec. 20. But the FDIC wants a four-year extension of the escrow agreement to ensure it remains in line to share in any possible award. The two parties have entered into negotiations. Once the escrow account is released, all proceeds from the goodwill case would go to WaMu. The escrow account currently holds 18 million shares of WaMu common stock and $85 million in cash from dividends and interest.