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NEW: NCUA Sues 13 Alleging LIBOR Manipulation
ALEXANDRIA, Va. (9/23/13, UPDATED, 6:44 p.m. ET)--The National Credit Union Administration today filed suit in federal district court in Kansas against 13 international banks, including J.P. Morgan Chase. The suit alleges violations of federal and state anti-trust laws transacted by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system.
 
The NCUA said in a release that manipulation of LIBOR, the benchmark for setting interest rates around the globe, 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.  
 
"We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions," NCUA Chairman Debbie Matz said, announcing the suit. "Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions."
 
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.
 
The agency said that although there have been more than 40 suits have been filed in relation to the LIBOR manipulation, the CUA is one of the first federal financial regulators to sue in this area.  
 
LIBOR is the average daily interest rate a group of leading financial institutions pay when they borrow from one another. The rate is set daily for 10 currencies around the world and affects interest rates on trillions of dollars of financial transactions of various kinds.
 
Recoveries from NCUA's legal actions will further reduce the total losses resulting from the failure of the corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. All federally insured credit unions repay expenditures from the stabilization fund through assessments, so any recoveries would help reduce future assessments on credit unions, the NCUA noted.
 
Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or "natural persons." Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.
 
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