Bank of America among 15 big banks accused of rate riggingSubmitted by cooper11 on Thu, 03/21/2013 - 16:09
By Marcy Gordon
Posted: Thursday, Mar. 21, 2013
A pedestrian walks outside a Bank of America branch in New York. BLOOMBERG FILE PHOTO.
WASHINGTON – Freddie Mac has sued 15 big international banks, including Bank of America, JPMorgan Chase and Citigroup, accusing them of rigging a key interest rate and causing huge losses for the government-controlled mortgage giant.
Freddie filed the lawsuit Thursday in federal court in Alexandria, Va. It names the banks that set the London interbank offered rate, known as LIBOR, which provides the basis for trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
In a growing scandal, two big British banks and Switzerland’s largest have been fined hundreds of millions of dollars for manipulating LIBOR by U.S. and British regulators.
A U.S. watchdog has found that Freddie and its larger sibling Fannie Mae together may have lost more than $3 billion on their investments from banks’ rate-rigging.
The banks schemed together daily to manipulate and hold down the value of LIBOR from August 2007 through at least May 2010, Freddie alleges in its suit. They “acted collectively to suppress … LIBOR, both to hide their institutions’ financial problems and to boost their profits,” the suit says.
The staff of the inspector general for the Federal Housing Finance Agency, which oversees Freddie and Fannie, gave the estimate of the losses late last year. The staff’s memo said that Freddie and Fannie sustained the losses on $1 trillion in mortgage securities and other investments linked to the LIBOR.
Read more here: http://www.charlotteobserver.com/2013/03/21/3928459/freddie-...