LIBOR scandal, Pt. 2: Class-action suits claim losses due to bank rigging of benchmark interest rate

[marmar]

from LiberationNews.org:




The LIBOR scandal, part two
Class-action suits claim losses due to bank rigging of benchmark interest rate

By Jon Britton
October 20, 2012


Homeowners, local governments, community banks and others have brought a series of class-action lawsuits claiming losses due to the rigging of the benchmark interest rate known as LIBOR. A group of homeowners filed suit earlier this month in New York federal court alleging that they had been cheated due to the rate's manipulation by the global banks involved in setting it.

LIBOR became the focus of headlines earlier this year when British banking giant Barclays admitted to manipulating it, reaching a $453 million settlement June 27 with U.S. and U.K. regulators. Other banks involved in setting LIBOR include JPMorgan, UBS, Citigroup and HSBC. All have said that they also are cooperating with investigations of the scandal, and additional settlements are expected.

The London Interbank Offered Rate is actually a collection of rates generated for 10 currencies across 15 different time periods, ranging from one day to one year. It is supposed to measure the cost of borrowing between the world's largest banks, generating rates that are used as benchmarks for an estimated $10 trillion in loans and some $350 trillion in derivatives. (Derivatives are bets on the movements of interest rates or prices of underlying assets over specific periods of time.)

The key fact brought out in the homeowners' lawsuit is that between 2000 and 2009 the banks that set the six-month, U.S.-dollar LIBOR consistently pushed it up on the first business day of each month. Those just happen to be the days on which adjustable-rate mortgages "reset"—generating a new value for the variable rate that borrowers pay on their mortgages based on the current LIBOR value plus an additional percentage as specified in the mortgage contracts. ..................(more)

The complete piece is at: http://www.pslweb.org/liberationnews/news/the-libor-scandal-part-two.html

[TreasonousBastard]

1. Is this another legal scam where the typical homeowner...

gets maybe $250 bucks after legal fees? Class action suits are a great idea in theory, but often enough are just a huge payday for lawyers.

I've gotten notices, but unless it's a good one, I refuse. Maybe the ones who accept get a good payout if enough of us refuse, but I remember one suit ending up with the plaintiffs owing the lawyers because the settlement didn't cover the court expenses.