U.S. mortgage financier Fannie Mae is suing nine major banks over allegations of manipulating the London interbank offered rate (Libor) that allegedly cost the federal agency $800 million.
Fannie Mae alleges that the banks in question, which include Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. acted to suppress the Libor through quotes provided to the British Bankers’ Association, according to a complaint filed Thursday in Manhattan federal court.
The alleged claims of the rate suppression caused Fannie Mae to lose as much as $332 million on interest-rate swaps with the BofA, Chase, Citigroup as well as Barclays, UBS, Royal Bank of Scotland, Deutsche Bank and Credit Suisse Group.
Fannie accused all nine banks of colluding to lower the Libor rate from 2007 to 2010.
“Defendants initially took these and other overt acts desired above to further corrupt agreement between them and to carry our a common plan to execute a fraud on Fannie Mae and to benefit defendants,” Fannie Mae claimed.
The lawsuit also includes claims of a breach of contract and breach of implied duty of good faith and fair dealing against all nine defendants, except dutch bank Rabobank International.
All nine banks were sued, however, for common law fraud as well as aiding and abetting.
The case bears similar resemblance to one brought up by Freddie Mac in March, where the agency sued more than a dozen banks over similar allegations.
Written by Jason Oliva
