By Karen Freifeld
NEW YORK, March 19 U.S. mortgage finance company
Freddie Mac is suing more than a dozen banks for
losses from the alleged manipulation of the benchmark interest
rate known as Libor.
Bank of America Corp, JPMorgan Chase & Co, UBS AG and Credit
Suisse Group AG are among the banks named as defendants in the
Freddie Mac, which invested in mortgage bonds and swaps tied
to U.S. dollar Libor, claims the banks colluded to rig the
benchmark from 2007 to 2010, according to the complaint, which
was filed March 14 in U.S. District Court for the Eastern
District of Virginia.
The banks worked together to artificially lower the U.S.
dollar Libor "both to hide their institutions financial problems
and to boost their profits," the complaint said. The lawsuit
seeks undetermined damages.
Freddie Mac and Fannie Mae, the two government-controlled
mortgage companies, may have suffered more than $3 billion in
losses as a result of Libor manipulation, according to a memo
obtained by Reuters in December.
The memo was sent to the Fannie and Freddie's regulator,
the Federal Housing Finance Agency, by its inspector general.
The watchdog urged the regulator to consider legal action.
Bank of America, JPMorgan Chase, UBS, Credit Suisse and
other banks did not immediately respond to calls for comment or
declined to comment.
More than a dozen banks have been under scrutiny by
authorities in the United States, Japan and Europe over claims
they altered the Libor.
Freddie Mac said it discovered the fraud and collusion when
Britain's Barclays admitted in June it submitted false Libor
submissions, according to the complaint. The bank agreed to pay
$453 million that month to settle with British and U.S.
UBS was fined $1.5 billion in December for fiddling with
interest rates, and Royal Bank of Scotland Group settled with
authorities for $612 million in February.
Libor rates are calculated by asking banks the level they
can expect to borrow from other banks.
The Libor rates submitted by banks for different currencies
are compiled by Thomson Reuters, parent company of Reuters, on
behalf of the British Banking Association, which also is a
defendant in the lawsuit.
The trade association could not be reached after hours for
The case is The Federal Home Loan Mortgage Corporation v
Bank of America, U.S. District Court for the Eastern District of