FDIC Sues Global Banks Over Libor

The Federal Deposit Insurance Corp. is suing many of the world’s largest banks for their role in manipulating a global interest rate benchmark, alleging their actions played a role in the failure of more than three dozen U.S. banks.

The banks named in the suit filed in federal court in New York on Friday include U.S. banks such as JPMorgan Chase, Bank of America and Citigroup, as well as international banks such as Barclays (BCS), the London bank that was the first one to admit its role in manipulating the interest rate.

The rate, known as the London Interbank Offered Rate, or Libor, is used as a benchmark to set rates for trillions of dollars worth of business and consumer loans worldwide. Employees at the banks allegedly manipulated the rate in order to make profits in their trading of derivatives based on the rate.
Related: Explaining the Libor scandal

The suit alleges that manipulation caused substantial losses at 38 smaller U.S. banks that closed and were taken over by the FDIC. The federal agency banks deposits at U.S. banks, and takes control of failed banks, seizing its assets and assuming most of its liabilities.
Most of the closed banks were relatively small, although one cited by the agency, Washington Mutual, was the nation’s largest thrift when it was taken over by FDIC in September 2008.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza