Banks suing banks due to a deal that went bad because of Covid!
The Core Issue: This dispute revolves around a $481 million loan tied to the Gramercy Park Hotel in New York City. The loan was part of a CMBS trust, and things went south when thehotel's owners defaulted amid financial troubles (exacerbated by the COVID-19 falloutand market shifts in the early 2020s).
JPMorgan's Claim:
JPMorgan argues it suffered losses (potentially hundreds of millions) because the loan's master servicer (initially Midland Loan Services, later involved parties) and others botched the handling of the default. They claim this led to the hotel being sold at a fire-sale price in 2024, undervaluing it and hurting the trust's value. JPMorgan positions itself as a "victim" of negligence or breach of contract.
Wells Fargo's Response:
In recent court filings (as of July 2025), Wells Fargo is pushing back hard. They say JPMorgan isn't an innocent victim—in fact, they allege JPMorgan's own decisions as special servicer contributed to the mess. For instance!
Crazy case! Two huge American banks are going at it in court due to a bad commercial mortgage backed security. Remember the Fed balance sheet had trillions of these MBS! The fiat system is so funny at times.
Who do you think wins? My sats are on JP Morgan.