Freddie Mac Files Suit Against Big Banks for Alleged LIBOR Manipulation

Freddie Mac is suing more than a dozen banks for the alleged manipulation of the London interbank offered rate (LIBOR) in the latest development in the longstanding LIBOR “scandal” involving trillions of dollars of loans potentially impacted. 

In a complaint made public this week, the government-sponsored enterprise is suing Bank of America, UBS, JP Morgan Chase and other banks for allegedly fixing the LIBOR rate. 

A Federal Housing Finance Agency report published in November indicated Freddie Mac and Fannie Mae may have lost as much as $3 billion as a result of the alleged manipulation.

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Bloomberg News reported on the suit this week, receiving no comment from the British Bankers’ Association, which drives the daily inquiry among banks to establish the LIBOR rate on a given day.

Bloomberg also received no comment from the banks listed in the complaint including those that have already been fined billions of dollars following a worldwide probe into the scandal. 

Read the Bloomberg report

Written by Elizabeth Ecker

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  • There are two things going on. There is an accusation of fraud by participants and an accusation of members using acceptable leeway which was not given what some believe full disclosure to the public.

    As to fraud, that is a bank by bank issue. As to utilizing leeway which was not in collusion with others, would seem to be an issue at the LIBOR rate provider level.

    The primary meaning of manipulation per Meriam Webster online is: “1. to treat or operate with or as if with the hands or by mechanical means especially in a skillful manner

    2a : to manage or utilize skillfully”

    It is not until later meanings that the concept of unfair or insidious comes into play.

    So what is the suit about? We will soon know.

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