Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

Washington
FDIC sues over banks' alleged Libor suppressions
WASHINGTON (3/17/14)--The Federal Deposit Insurance Corp. has taken action against 16 of the world's biggest banks, alleging they manipulated the London interbank offered rate (LIBOR), several outlets reported last week.

Bank of America, Merrill Lynch, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase and Bear Stearns Capital Markets are among the institutions reportedly named in the suit, which was filed in the Southern District of New York. The British Banking Association is also named in the suit. The suit references actions taken between 2007 and 2011.

The FDIC is seeking an unspecified amount of damages, according to several reports.

LIBOR is used by financial institutions to set interest rates on a variety of financial products, including mortgages, student loans and credit cards. LIBOR for the U.S. dollar is based on information provided by 18 global financial institutions, including several U.S. banks.

British bank Barclays PLC in 2012 admitted that some of its employees between 2005 and 2009 conspired with employees of other financial firms to manipulate LIBOR and the Euro Interbank Offered Rate to support their own financial positions. The firm has been fined by the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, and the United Kingdom's Financial Services Authority.

More than 40 suits alleging LIBOR manipulation have been filed, including a 2013 suit by the National Credit Union Administration. The agency filed suit in federal district court in Kansas against 13 international banks, alleging violations of federal and state anti-trust laws through LIBOR manipulation. The NCUA said this alleged 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.

The NCUA claims the defendants in today's action individually and collectively gave false interest rate information through the LIBOR rate-setting process "to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled."

The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying, the NCUA said.


RSS print
News Now LiveWire
.@BelvoirFederal revamped the checking acct. it offers to active duty military members and achieved 23% growth on the product in 1 mo.
15 hours ago
.@FinancialCmte markup of Reg D Study Act set for Tuesday. CUNA will submit support letter. http://t.co/cDWkZ0Q0x1
19 hours ago
The 54th Western CUNA Management School graduated 89 students on July 25.
20 hours ago
.@CUNA Bank Secrecy Act training to reach 38 Mich. state examiners #NewsNow http://t.co/7HDPgwih8G
21 hours ago
St. Louis treasurer taps #creditunion to serve unbanked #NewsNow http://t.co/lWtcezJOej
7 25 ago