|October 31, 2013
Mortgage-finance giant Fannie Mae is suing nine banks over their alleged participation in manipulating worldwide interest rates, according a lawsuit filed Thursday afternoon in federal court in Manhattan. Fannie says it suffered $800 million in damages from the manipulation of the London interbank offered rate (Libor ) and other financial benchmarks that are used to set interest rates on mortgages, credit cards and other financial products around the world.
Fannie is not the first to seek legal action for the alleged rate-manipulation: in March, Freddie Mac sued over a dozen banks for an undisclosed amount of losses from products (like mortgage bonds and swaps) tied to the rate. In September, the National Credit Union Association sued 13 banks for their alleged participation in the rate manipulation. The NCUA said the rate manipulation “resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.”“Fannie Mae filed this action to recover losses it suffered as a result of the defendants’ manipulation of Libor. We have a responsibility to be good stewards of our resources,” the company said in a statement emailed to Forbes. Fannie Mae representatives said they could not provide any further comment.
The nine banks named in Fannie’s suit are Barclays BCS -2.1%, UBS UBS -0.41%, RBS, Deutsche Bank DB -0.9%, Credit Suisse, Bank of America, Citibank, JPMorgan, and Rabobank. The suit noted that four of these banks – Barclays, UBS, RBS, and Rabobank — admitted wrongdoing, and Fannie Mae is using this to bolster their claim that the other banks were participants in the rate manipulation, too.Read More...