Business

FDIC Sues Banks Over Rate Rigging

[Fox Business]
Federal Deposit Insurance Corporation (AP Photo)
Federal Deposit Insurance Corporation (AP Photo)

The Federal Deposit Insurance Corporation – one of the main U.S. bank regulators – sued many of the world’s largest banks on Friday, charging them with rigging a key global interest rate.

JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C),  and Barclays (BCS)  are among the banks named as defendants in the suit filed in federal court in New York.

The rate in question is called the London Interbank Offered Rate, or LIBOR for short. LIBOR underpins some $350 trillion in derivatives and $10 trillion in loans, according an estimate by the U.S. Commodities Futures Trading Commission. The items range from mortgage rates to exotic securities.

In the suit, the FDIC accuses the banks of “manipulation and suppression” of LIBOR, alleging that the defendants “fraudulently and collusively” suppressed the rate “to their advantage.”

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