US FDIC sued 16 world largest banks for manipulating LIBOR rates

The US regulator, Federal Deposit Insurance Corporation (FDIC) filed a law-suit on 16 world’s largest banks, as these global financial institutions are accuse of conspiring to manipulate the LIBOR interest rate.
The US regulator stated that the manipulation caused substantial losses to 38 US banks that were shut down due to insolvency during and after the 2008 financial crisis.

• These global financial institutions broke certain swap contracts and separately planed to rig the LIBOR rate to which the contracts were signed.
• Banks that have been sued in setting the daily Libor rate: Bank of America, Citigroup and JPMorgan Chase of the United States, Germany’s Deutsche Bank and WestLB, Britain’s HSBC, Barclays and Lloyds banks, Japan’s Norinchukin Bank and Bank of Tokyo—Mitsubishi, Credit Suisse and UBS of Switzerland, Royal Bank of Scotland, Royal Bank of Canada, and Rabobank of the Netherlands.

About LIBOR (London Interbank Offered Rate) interest rate

• The rate at which banks in London lend money to each other for the short-term in a particular currency. In other words, its’ an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market.
• World’s most widely used benchmark for short-term interest rates.
• A new Libor rate is calculated every morning by financial data firm Thomson Reuters based on interest rates provided by members of the British Bankers Association.

Note: FDIC is an independent agency created by the U.S. Congress to maintain stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions for safety and soundness and consumer protection and managing receiverships. (Headquarters:Washington, D.C.).

Month: Current Affairs - March, 2014