SAN FRANCISCO (Reuters) - A San Francisco County supervisor is calling for an investigation into possible losses to the city and county linked to a widely used interest-rate benchmark that regulators say was manipulated.
John Avalos is “looking to call a hearing to review the city’s finances and potential losses” from swaps based on the London interbank offered rate, Avalos aide Jeremy Pollock said in an interview.
At issue are potential losses on swaps tied to Libor, a widely used benchmark little remarked outside financial circles until last June when the UK and the United States fined British bank Barclays $450 million for fixing rates during the credit crisis.
Swiss bank UBS has since reached a $1.5 billion settlement for its role in the scandal, and Royal Bank of Scotland is braced for as much as $800 million in fines.
Several California cities, counties and a Bay Area public utility earlier this month filed federal lawsuits seeking damages for antitrust and other violations related to alleged Libor rate-rigging (tinyurl.com/b9xkcl2).
Other claims have come from local governments like the city of Baltimore, large investors, home owners who say rate rigging made their mortgages more expensive, and small U.S. banks.
A statement from community activists and a labor union distributed to the press suggested an investigation could lead to legal action, but Pollock said he was unsure if that would be the case.
So far he has not identified any swap that appears to be “toxic,” he said, and it is unclear how much San Francisco was affected.
Reporting by Ann Saphir; Editing by Phil Berlowitz