WASHINGTON – Fannie Mae sued nine major banks Thursday, alleging the banks’ participation in the rigging of a key global interest rate cost the mortgage giant hundreds of millions of dollars.
The banks sued include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and others that set the London interbank offered rate, or LIBOR, which is the basis for trillions of dollars in contracts, including mortgages and bonds.
Fannie claims it lost $800 million from transactions that were based on the banks’ false submissions of their borrowing costs used to calculate LIBOR. The banks deliberately held down the value of LIBOR to benefit their trading positions and boost profits, Fannie said.
Four of the banks – Britain’s Barclays and Royal Bank of Scotland, Switzerland’s largest bank, UBS, and the Dutch Rabobank – have been fined a total $3.6 billion by U.S. and British regulators for manipulating LIBOR.
Spokesmen for Bank of America, Citigroup and JP-Morgan declined to comment on Fannie’s lawsuit. The other two banks sued are Germany’s Deutsche Bank and Switzerland’s Credit Suisse.
The lawsuit says the three U.S. banks, as well as Deutsche Bank and Credit Suisse, remain under investigation in connection with alleged manipulation of LIBOR.
Fannie’s sibling, Freddie Mac, filed similar suits against 15 banks in March.