Freddie Mac sues big banks over Libor-rigging scandal
US government-controlled mortgage giant Freddie Mac has sued more than a dozen of the world’s biggest banks over losses from the alleged rigging of the Libor interest rate.
Freddie Mac, in a March 14 court filing made public Tuesday, took legal action against Bank of America, JPMorgan Chase and Citigroup, as well foreign banks including Barclays, HSBC, UBS, Credit Suisse and Deutsche Bank.
The suit also was filed against the British Bankers’ Association, which publishes the Libor interest rate, a benchmark interbank rate for global financial contracts.
Freddie Mac, which was seized by the US government to prevent its collapse in the 2008 financial crisis, said it incurred losses as a result of the setting of unfairly low US dollar (USD) Libor rates in the 2007-2010 period.
“Each defendant owed a duty to Freddie Mac to honestly and accurately report USD Libor and not to intentionally mislead Freddie Mac and others by secretly and collectively manipulating USD Libor for their gain and to the detriment of others in the financial markets,” the company said in the filing with a US federal court in Virginia.
“Freddie Mac suffered damages in the form of, among other things, lower interest rate payments from defendants and others from financial products that incorporated Libor.”
Freddie Mac did not state the amount of the losses.
A number of banks have been taken to court since the Libor scandal erupted in June 2012 after British bank Barclays was fined 290 million pounds ($439 million) by British and US regulators for attempted manipulation of Libor, and its eurozone equivalent Euribor, between 2005 and 2009.
Swiss bank UBS and Royal Bank of Scotland have since paid heavy fines for their role in the scandal.