Telis Demos and Shahien Nasiripour
The Lehman Brothers estate is seeking to force Tim Geithner, US Treasury secretary, to act as a witness as it attempts to make its case that JPMorgan Chase forced the investment bank into bankruptcy.
Lehman last year filed suit against JPMorgan, which served as Lehman?s primary bank before its collapse in September 2008, seeking the return of $8.6bn in collateral, plus potentially billions more in damages.
The suit claims that JPMorgan abused its knowledge of Lehman?s condition, learnt in part by discussions with US officials, to make last-second collateral grabs that forced Lehman to file for bankruptcy.
Lehman?s lawyers have asked Mr Geithner, who was then president of the New York Federal Reserve, to answer questions about what he might have told JPMorgan during that period.
They claim that the US Treasury department ?delayed and ultimately refused? the request. ?Treasury now turns its back on [President Barack Obama?s] commitment to transparency,? Lehman said in its court filing, submitted late on Thursday.
The estate is now asking Judge James Peck of the southern district of New York bankruptcy court to compel Mr Geithner to be deposed. The suit is set to go to trial later this year, and the discovery period ends 16 March.
JPMorgan has denied Lehman?s claims and is fighting the suit. It has also counter-sued Lehman, claiming that Lehman misled it about its financial condition by the use of secretive accounting techniques and handed over intentionally poor collateral.
As rationale for deposing Mr Geithner, Lehman cited records of telephone calls between Jamie Dimon, JPMorgan chief executive, and Mr Geithner on September 11 2008, the night that JPMorgan began its collateral demands. ?It appears they discussed JPMorgan?s purported justification for the collateral,? Lehman said.
Lehman said it would also pursue Henry Paulson, then-Treasury secretary, to give a deposition.
Treasury said in a statement that it had ?provided thousands of pages of documents and arranged for depositions of numerous other witnesses? and offered written declarations from Mr Geithner, in addition to his previous public testimony.
?Given all the available information, it is unclear why [Lehman] continues to insist on unnecessary depositions of current and former Treasury secretaries,? Treasury said.
David Skeel, a professor of bankruptcy law at the University of Pennsylvania, said it was unlikely that Mr Geithner would be forced to comply.
?A top government official can be called to testify, but if he or she just said no, the court would probably refuse to intervene,? he said. He added: ?The odds that Mr Geithner would say something new and headline-worthy are very low.?