Daily News: September 24, 2013

NCUA Sues Over LIBOR Manipulation

The National Credit Union Administration (NCUA) filed suit in Federal District Court in Kansas against 13 international banks, including JPMorgan Chase, alleging violations of federal and state anti-trust laws by manipulation of interest rates through the London Interbank Offered Rate (LIBOR) system.

NCUA claims the defendants in today’s action individually and collectively gave false interest-rate information through the LIBOR rate-setting process “to benefit their investments that were tied to LIBOR, to reduce their borrowing costs, to deceive the marketplace as to the true state of their creditworthiness, and to deprive investors of the interest rate payments to which they were entitled.” The false information created the impression the defendant banks were borrowing money at a lower interest rate than they were actually paying.

More than 40 suits have been filed in relation to the LIBOR manipulation. NCUA is one of the first federal financial regulators to sue in this area.

The manipulation of LIBOR, the benchmark for setting interest rates around the globe, resulted in a loss of income from investments and other assets held by five failed corporate credit unions: U.S. Central, WesCorp, Members United, Southwest and Constitution.

“We have a responsibility to pursue recoveries through every available avenue against those who caused billions of dollars in losses to credit unions,” NCUA board chairman Debbie Matz said. “Some firms were manipulating international interest rates in a way that cost the five corporates to lose millions of dollars. Just as we are doing in our other suits, we are seeking to hold responsible parties accountable for their actions.”