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FDIC files lawsuit on behalf of banks allegedly hurt by Libor scandal

March 15, 2014 at 4:41 PM   |   Comments

NEW YORK, March 15 (UPI) -- The Federal Deposit Insurance Corp. alleges that 16 U.S. banks made money for themselves, and ruined other banks, by manipulating international interest rates.

A lawsuit filed Friday in federal court in New York names banks that sat on the board involved in setting the London Interbank Offered Rate -- or Libor. Libor is an important benchmark for setting interest rates on loans in many currencies, ranging from student loans and home mortgages to financial instruments like derivatives.

The FDIC said it was suing on behalf of banks forced out of business by the global financial crisis. The defendants include giants like Bank of America, Citigroup and JPMorgan Chase.

The manipulation helped the banks charge higher underwriting fees "to the detriment of the closed banks and other consumers," the FDIC said in its complaint.

The Royal Bank of Scotland and Barclays in Britain, UBS in Switzerland and Rabobank in the Netherlands have been fined for their role in the Libor scandal.

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