By Marcy Gordon
AP Business Writer
WASHINGTON (AP) — Fannie Mae recently sued nine major banks, alleging the banks’ participation in the rigging of a key global interest rate cost the mortgage giant hundreds of millions of dollars.
The banks sued include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and others that set the London interbank offered rate, or LIBOR, which is the basis for trillions of dollars in contracts, including mortgages and bonds.
Fannie claims it lost $800 million from transactions that were based on the banks’ false submissions of their borrowing costs used to calculate LIBOR.
The banks deliberately held down the value of LIBOR to benefit their trading positions and boost profits, Fannie said.
In a statement, Fannie said it brought the suit to recover its losses. “We have a responsibility to be good stewards of our resources,” the company said.
Four of the banks — Britain’s Barclays and Royal Bank of Scotland, Switzerland’s largest bank UBS and the Dutch Rabobank — have been fined a total $3.6 billion by U.S. and British regulators for manipulating LIBOR.
Spokesmen for Bank of America, Citigroup and JPMorgan declined to comment on Fannie’s lawsuit. The other two banks sued are Germany’s Deutsche Bank and Switzerland’s Credit Suisse.
The lawsuit says the three U.S. banks, as well as Deutsche Bank and Credit Suisse, remain under investigation in connection with alleged manipulation of LIBOR.
Fannie’s smaller sibling Freddie Mac filed similar suits against 15 LIBOR-setting banks in March.
The inspector general for the Federal Housing Finance Agency reported last year that Fannie and Freddie together may have lost more than $3 billion on their transactions from the banks’ rate-rigging.
FHFA oversees Fannie and Freddie, both of which were rescued during the 2008 financial crisis and are now government controlled.
The legal action by Fannie and Freddie added to a flurry of lawsuits filed by cities and municipal agencies in the U.S. against some of the banks that set LIBOR.
The cities and agencies are seeking damages for losses they say they suffered as a result of an artificially low rate, because they hold bonds and other investments whose value is pegged to LIBOR.
––––––––––––––––––––
Subscribe to the Legal News!
http://legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available
