Lehman and Its Creditors Seek to Subpoena GeithnerBy MICHAEL J. DE LA MERCED
4:40 p.m. | Updated with Treasury comment
Lehman Brothers‘ bankruptcy estate and its official committee of unsecured creditors asked a court late on Thursday to compel Treasury Secretary Timothy F. Geithner to testify about the investment bank’s collapse.
The request for a subpoena comes as part of the estate’s lawsuit against JPMorgan Chase, which asserts that the bank illegally took $8.6 billion in collateral from Lehman, precipitating that firm’s demise.
The lawsuit’s main argument is that JPMorgan, apprised of Lehman’s fragile condition, improperly profited from making its collateral demands — and also pushed Lehman into bankruptcy.
Lawyers for Lehman’s creditors wrote in a court filing that they and the estate served Mr. Geithner with a subpoena last August, ordering him to testify about conversations he had held with both JPMorgan and Lehman over the former’s calls for collateral in early September 2008.
Mr. Geithner, then president of the Federal Reserve Bank of New York, spoke with JPMorgan’s chief executive, Jamie Dimon, 10 times in the week before Lehman fell, according to the filing. Many of those conversations, the lawyers contend, must have been about JPMorgan’s collateral demands.
“It is certainly relevant and necessary to understand if Dimon indicated on these calls that JPMorgan was ‘going to cease operating on a business-as-usual basis with Lehman’ if Lehman did not provide collateral to JPMorgan,” lawyers wrote in the filing.
Mr. Geithner also spoke 35 times to Lehman’s then-chief executive, Richard S. Fuld Jr. during that time, giving him insight into the faltering bank’s financial condition.
The estate and its creditors contend that they aren’t seeking to ask Mr. Geithner about the New York Fed‘s internal discussions about its response to Lehman’s ailing condition, and that they are seeking only to ask him about his conversations with nongovernment individuals like Mr. Dimon.
Thus far, however, Treasury hasn’t committed to making Mr. Geithner available for a deposition. Lehman is seeking to force him to testify before a March 16 deadline for discovery in the lawsuit.
The Lehman estate has also sought the testimony of Mr. Geithner’s predecessor as Treasury secretary, Henry M. Paulson Jr. Lawyers for the creditors said that they would address Mr. Paulson’s testimony in a separate move.
A Treasury spokesman, Anthony Coley, noted that Mr. Geithner had “given public testimony about the failure of Lehman Brothers on multiple occasions before Congress and other government bodies.”
“In this particular matter, Treasury and the Federal Reserve have cooperated extensively with the plaintiffs,” he said in an e-mail. “Treasury and the Fed have provided thousands of pages of documents and arranged for depositions of numerous other witnesses. We have also offered to provide a written declaration from the secretary in order to provide any additional information that the parties are seeking.”
“Given all the available information, it is unclear why plaintiffs continue to insist on unnecessary depositions of current and former Treasury secretaries,” Mr. Coley said.