(Reuters) - A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.
The judge refused the FDIC's request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.
Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.
The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.
The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.
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