NEW YORK ( TheStreet) -- Washington Mutual looks increasingly likely to extract a settlement from JPMorgan Chase ( JPM - Get Report) as the companies battle in court over a disputed $4 billion in cash deposits and several billions in other assets, according to a close observer of the complex case.

Washington Mutual and JPMorgan attorneys have both laid claim to the disputed assets following JPMorgan's acquisition of the failed thrift's assets last year. Senior bonds of Washington Mutual's holding company have rallied from a low of 20 cents on the dollar to the high 90s on the belief that Washington Mutual will recover at least some of that amount.

In their latest motion, however, Washington Mutual's attorneys have upped the ante, pointing to documents they say highlight a need to "expand to third parties" an investigation they say the bankruptcy court has authorized into JPMorgan's "alleged malfeasance prior to the seizure and sale of Washington Mutual."

And quite a list of third parties it is. Washington Mutual's lawyers want to interview regulators at the FDIC, the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Federal Reserve, the Treasury Department, the Securities and Exchange Commission, former Treasury Secretary Henry Paulson, ratings agencies Moody's Investors Service ( MCO, McGraw Hill Companies' ( MHP unit Standard and Poor's, and companies they say considered buying Washington Mutual, including Banco Santander ( STD, Toronto-Dominion Bank ( TD, and Wells Fargo ( WFC. Among other parties, they also want to interview executives at Goldman Sachs ( GS, which advised Washington Mutual on its sale.

The motion says the interviews are necessary in light of claims made in a separate case, American National Insurance Co. vs. FDIC, in which attorneys for American National argue that JPMorgan "engaged in sham negotiations," among other tactics "to gain an unfair advantage in obtaining Washington Mutual assets at a 'fire sale' price." JPMorgan spokesmen did not respond to an email message seeking comment on the litigation.

Kevin Starke, a bond analyst at CRT Capital who has been following the JPMorgan-WaMu case closely, thinks the judge will grant Washington Mutual's attorneys' request, as the rule the attorneys use to justify it "permits discovery quite broadly, including on 'any...matter relevant to the case,'" Starke wrote in a research note published Wednesday, citing federal bankruptcy rules.

However, Starke also believes JPMorgan will be strongly incentivized to settle the case, rather than allow Washington Mutual's attorneys to go on such a broad and lengthy "fishing expedition," he told

"You go on that broad a hunt, there's a good chance you're going to find something," Starke says.

Whatever the outcome of the case, Starke does not believe owners of Washington Mutual's common stock have any hope of recovery, nor does he believe it will have much if any effect on JPMorgan's stock, as the amounts in dispute are relatively minor for the banking giant. Washington Mutual shares have swung wildly on heavy volumes at different periods in recent months, on hopes a favorable court ruling will help them recover some value.

-- Written by Dan Freed in New York.

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