Ongoing lawsuits for the scandal of manipulation of the London interbank offered rate, known as Libor, the U.S. Federal Deposit Insurance Corporation to file a lawsuit against 16 of the largest banks in the world, seeking damages of approximately 1 billion dollars. The U.S. regulatory authority filed the lawsuit on behalf of 38 U.S. banks that went bankrupt during the global financial crisis, claiming that they lost money because of the manipulation of Libor, one of the largest worldwide benchmarks under which interest rates are calculated for financial products of 550 trillion dollars of home loans to derivatives. The claim is based on antitrust law, as previous lawsuits filed by individuals who have been rejected by the U.S. courts, but in breach of contract that had been signed between the parties.
The action is brought against Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan, Royal Bank of Scotland, Rabobank, Loyds, Societe Generale, Norinchukin, Royal Bank Of Canada, Bank of Tokyo-Mitsubishi, UBS and West LB. Some of the above banks have already paid a total of about 6 billion in fines in case of Libor, in American, British and European authorities. Overall, at least ten regulatory authorities around the world are investigating the involvement of at least 20 banks in case Libor. The Federal Deposit Insurance Corporation is responsible for clearing distressed banks and will often try to limit losses of failed banks through the courts.
The lawsuit contends that the FDIC banks representing damaged by the manipulation of Libor due financial products that were purchased as derivatives swaps which were connected with the benchmark. The losses incurred in accordance with the treatment, because 16 banks combined to manipulate the Libor rate in an attempt to disguise their difficult financial position or to earn more money from derivative transactions. Similar lawsuits have been filed before the two American Mortgage banks nationalized Fannie Mae and Freddie Mac and many individuals.
By Nicole P.