FANNIE Mae sued nine of the world’s largest banks yesterday, accusing them of colluding to manipulate interest rates and seeking more than $800m (£499m) in damages.
In a complaint filed in the US District Court in Manhattan, the government-controlled mortgage company accused the banks of conspiring for years to suppress Libor, or the London Interbank Offered Rate, including during the 2008 financial crisis.
Libor underpins hundreds of trillions of dollars of transactions, and is used to set interest rates on such things as credit cards and mortgages.
But according to yesterday’s lawsuit, “defendants’ promises and representations regarding the legitimacy of Libor were false,” causing Fannie Mae to lose money on swaps, mortgages and other transactions.
The lawsuit adds to the legal headaches over whether banks manipulated Libor and other rate benchmarks to boost profit or appear healthier than they actually were.
Regulators in the United States, Europe and Asia have been investigating many banks over alleged manipulation of Libor and other rate benchmarks.
Four banks sued by Fannie Mae – Barclays, Rabobank, Royal Bank of Scotland and UBS – have reached settlements that totaled $3.6bn and included admissions of wrongdoing.
The scandal also cost the jobs of Barclays’ and Rabobank’s respective chief executives, Bob Diamond and Piet Moerland.
Other bank defendants in the Fannie Mae lawsuit are Bank of America, Citigroup, Credit Suisse Group, Deutsche Bank AG and JP Morgan Chase. All nine banks declined to comment.
Freddie Mac, another US government-controlled mortgage company, filed a similar lawsuit in March seeking unspecified damages from more than one dozen banks.