Freddie Mac Sues Big Banks Over Rate Rigging

Remember the LIBOR scandal? So does mortgage giant Freddie Mac, and it wants banks to pay.

Freddie Mac Sues Big Banks Over Rate Rigging Photo (cc) by epSos.de

It’s the government-controlled mortgage finance company versus Bank of America, JPMorgan Chase, UBS, Credit Suisse Group, and many others. Freddie Mac says they all worked together to rig LIBOR – the benchmark rate used to establish interest rates on everything from mortgage loans to credit cards.

If you need some background on LIBOR or the scandal surrounding it, check out our story from last summer. But all you really need to know is that big banks were caught manipulating the rate to their advantage, in many cases for years, forcing millions to pay inflated interest on all kinds of loans, all over the world.

Many banks have already been fined hundreds of millions of dollars: Barclays paid the British and U.S. governments $453 million; UBS paid $1.5 billion; the Royal Bank of Scotland, $612 million.

And now Freddie Mac, which has major investments in mortgage-related securities affected by LIBOR, wants some payback too. A week ago, the mortgage company sued more than a dozen banks for unspecified damages. Reuters reports the bank shenanigans may have cost the company more than $3 billion.

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