Fannie Mae sues banks for $800 million over Libor manipulation

Fannie Mae sued nine major banks over allegations their manipulation of the London interbank offered rate cost the mortgage financing company about $800 million.

The U.S. government-owned firm alleged that banks including Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. acted to suppress the rate, according to a copy of the complaint filed today in Manhattan federal court. The filing couldn’t be immediately confirmed in court records.

Global authorities have been investigating claims that more than a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or to make the lenders’ finances appear healthier.

The alleged suppression of the rate caused Washington-based Fannie Mae to lose as much as $332 million on interest-rate swaps with Barclays Plc, UBS AG, Royal Bank of Scotland Plc, Deutsche Bank AG, Credit Suisse Group AG, Bank of America, Citigroup and JPMorgan, according to the complaint.

“Defendants initially took these and other overt acts described above to further the corrupt agreement between them and to carry out a common plan to execute a fraud on Fannie Mae and to benefit defendants,” the mortgage financing company claimed.

The lawsuit includes claims of breach of contract, breach of implied duty of good faith and fair dealing against all the defendants except Rabobank International NA. All nine were sued for common law fraud as well as aiding and abetting. Fannie is seeking damages including consequential damages, punitive damages, prejudgment interest and attorneys’ fees.

In March, mortgage financier Freddie Mac, also owned by the U.S., sued more than a dozen banks over similar allegations.

The case is Federal National Mortgage Association v. Barclays Bank Plc, 0:13-cv-7720, U.S. District Court, Southern District of New York (Manhattan).

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