Fannie Mae Sues Banks Over LIBOR-Related Losses
Fannie Mae has reportedly filed an $800 million lawsuit in an effort to recoup its losses related to the LIBOR rate-fixing scandal.
Fannie Mae alleges that the manipulation of the benchmark interest rate cost the firm approximately $800 million, and it is suing nine banks, including Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, JPMorgan Chase, Rabobank, Royal Bank of Scotland, and UBS AG Bank.
The claims of the lawsuit purportedly involve breach of contract, and breach of implied duty of good faith and fair dealing, as well as fraud aiding and abetting. In March of this year, Freddie Mac also sued more than a dozen other banks related to the LIBOR scandal.
This all follows a memo released in November 2012 to Edward DeMarco, the acting director of the FHFA (Federal Housing and Finance Agency), which is the conservator of government-controlled Fannie Mae and Freddie Mac, from Steve Linick, its Inspector General, which estimated that the enterprises net losses "may have exceeded $3 billion."
On October 25, it was announced that JPMorgan had agreed to pay $5.1 billion to Fannie Mae and Freddie Mac due to mortgage-backed security allegations. In addition, four of the banks, Barclay, Rabobank, Royal Bank of Scotland, and UBS, have all settled with regulatory bodies for a total of $3.6 billion that also include an admission of wrongdoing.
The article Fannie Mae Sues Banks Over LIBOR-Related Losses originally appeared on Fool.com.Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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