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 The global financial institutions broke certain swaps contracts they
had entered into with the now-closed banks, by separately colluding
to rig the Libor rate to which the contracts were tied, the FDIC
said.
Some of the banks accused in the lawsuit, including Barclays Plc and
UBS, have already paid some $6 billion to resolve charges from U.S.
and European authorities that they worked to manipulate benchmark
interest rates.
They have also been sued by investors and others who claim they lost
money due to the manipulation. A federal judge last March dismissed
many of those claims that were based on antitrust law, but has yet
to rule on cases that rely on the "breach of contract" theory used
by the FDIC.
"These look very much like claims that I think are going to have a
much better chance with the court," said Daniel Brockett, a lawyer
with Quinn Emanuel Urquhart & Sullivan who had brought other cases
against banks over Libor manipulation.
A representative of the FDIC declined comment. Representatives of
the banks declined comment or did not respond to a request for
comment.
Libor, which is the average rate that a panel of banks say they can
borrow unsecured funds, has become a key rate globally, underpinning
more than $550 trillion in financial products, from home loans to
derivatives.
"SUBSTANTIAL LOSSES"
The financial institutions' conduct caused "substantial losses" to
38 banks that the U.S. regulator had taken into receivership since
2008, including Washington Mutual Bank and IndyMac Bank, the FDIC
said.
The regulator did not quantify the losses at issue. The lawsuit also
did not specify what damages the FDIC is seeking.
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The lawsuit also accused the British Bankers' Association, the U.K.
trade organization that during the period at issue administered
Libor, of participating in the scheme.
The BBA had said it independently monitored the banks' Libor
submissions, and represented that Libor was a "transparent"
benchmark, even though it knew those statements were false, the FDIC
said. A representative of the BBA declined comment.
The banks named as defendants include Bank of America Corp,
Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, HSBC
Holdings PLC, JPMorgan Chase & Co, and Royal Bank of Scotland Group
PLC.
Other defendants in the lawsuit are Rabobank, Lloyds Banking Group
plc, Societe Generale, Norinchukin Bank, Royal Bank of Canada, Bank
of Tokyo-Mitsubishi UFJ and WestLB AG.
The case is Federal Deposit Insurance Corporation, et al, v. Bank of
America Corp, et al, U.S. District Court, Southern District of New
York, No. 14-1757.
(Reporting by Nate Raymond in New York
and Aruna Viswanatha in Washington; editing by Karey Van Hall, Chizu
Nomiyama and Paul Simao)
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