13 GIANT LENDERS SUED OVER
LIBOR
Published time: September 24, 2013 14:06
Reuters / Mike Segar
Reuters / Mike Segar
JPMorgan Chase, Barclays, Credit Suisse, and 10 other world’s
biggest international lenders are being
sued by a US regulator for causing millions of losses to credit unions by
allegedly manipulating the Libor
benchmark rate.
Five credit unions were forced to close after they received
less interest income than they were entitled
to because of the manipulated Libor rates, according to the statement
released on
Monday by the National
Credit Union Associations (NCUA). The complaint was filed in Kansas in a
US District Court, Reuters reports.
“We have a responsibility to pursue recoveries through
every available avenue against those who caused
billions of dollars in losses to credit unions,” NCUA Board
Chairman Debbie Matz said the Monday night
statement.
“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,” Matz added.
Other banks facing a
slew of probes are Lloyds Banking Group Plc, Westb AG, Royal Bank of Scotland,
Cooperation Centrale Raiffesisen Boerenfleenbank, The Norinchukin Bank, the Bank
of Tokyo-Mitsubishi UFJ Ltd., HBOS Plc., Societe Generale SA, and Royal Bank of
Canada.
The
London Interbank Offered Rate, or the Libor, is the world’s most widely used
benchmark for
short-term interest rates in the interbank
market. It’s calculated on a daily basis by the British
Bankers’
Association (BBA) on the basis of the
average of the world’s most creditworthy banks’ interbank deposit
rates
for larger loans. While the rate
reflects the cost of borrowing among the banks, it also automatically
reflects
lending rates for
individuals.
Rigging ‘soap opera’
Dozens of banks have been investigated over their involvement
in losses between 2005 and 2010 due to the
lenders’ manipulation of the Libor.
US mortgage company Freddie Mac claims it
suffered more than $3 billion in losses, and is
suing
more than a dozen banks, including Bank of
America, JPMorgan Chase, UBS, CitiGroup, Royal
Bank
of Scotland, and Credit Suisse for setting the Libor low against the dollar in
order to hide problems
and boost profits.
The Freddie Mac complaint was
filed March
14 in US District Court in the state of
Virginia.
Barclays, UBS and Royal Bank of Scotland were fined a total of
$2.6 billion for manipulating rates. Last
week UBS
agreed to pay $1.5 billion to revolve
all international civil and regulatory probes.
The scandal forced both
Barclays chief executive Bob Diamond and chairman Marcus Agius to
resign.
New Barclays chief Anthony Jenkins has insisted employees sign a ‘code of
honor’ to avoid future
rigging scandals.
RBS, the biggest state-owned British bank, was fined $610 million by UK and US authorities for its part
in the Libor
rate-fixing scandal. The bank’s annual losses ballooned to over $9 billion in 2012 up
from $3.03 billion in the previous
year.
In June 2012,
Barclays paid £290 million in fines to US and UK financial
agencies.
The European Union is considering the transfer of control of the Libor from the
UK to France. It is to
restore trust in the key interbank lending rate after
the rigging scandal.
Thomson Reuters and
Bloomberg have expressed interest in controlling the Libor rate as neutral
data
providers or bank
‘outsiders.’ [These folks are cabal!
~J]
--
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