By Colin Barr
September 28, 2010

The hits keep coming for the Federal Deposit Insurance Corp.

The FDIC, busy cleaning up after the biggest run of bank failures in 20 years, now faces a costly legal battle with perhaps the biggest beneficiary of the financial meltdown of 2008, JPMorgan Chase

.

The bank wants the FDIC to cover the cost of defending lawsuits facing JPMorgan following its September 2008 fire sale acquisition of Washington Mutual, the Seattle thrift whose collapse ranks as the biggest-ever U.S. bank failure.

The JPMorgan-WaMu tie-up ranks as one of the all-time sweetheart deals, ranking alongside JPMorgan’s acquisition earlier in 2008 of Bear Stearns for less than the price of Bear’s Manhattan headquarters.

JPMorgan paid just $1.9 billion for the banking assets of a bank with a huge West Coast presence and $188 billion in deposits. Asked the evening of the deal to comment on what rival bids JPMorgan might have bested, CEO Jamie Dimon (right) said, “We don’t know and we don’t care.”

The FDIC arranged the deal just over a week after the failure of Lehman Brothers and the bailout of AIG

, and billed the arrangement, favorable as it was for JPMorgan, as “a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses.”

But the deal could get even better for JPMorgan, thanks to the FDIC’s agreement to cover certain liabilities in the deal. The Wall Street Journal estimates the bank’s claims at $6 billion. The dispute includes suits over supposed mortgage missteps by Washington Mutual, a notorious subprime lender during the housing bubble.

The FDIC last year raised the amount it charges banks for the cost of providing deposit insurance, and the federal deposit insurance fund has been under water for a year. The agency expects bank failures to peak this year but expects to continue picking up the tab for several more.

The prospect of another drain on the agency’s funds can’t make Chairman Sheila Bair happy. An FDIC spokesman says only that “we haven’t made any public revisions to that loss estimate.”

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