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Fannie Mae wades into Libor fight

The US lender is suing nine banks, including several in the UK and Europe, for £500m in damages. The US seems to be after a lot of foreign cash...

by Emma Haslett
Last Updated: 26 Feb 2014

If the storm over Libor fixing was threatening to blow over, Fannie Mae (sounds misleadingly like a friendly grandmother, but is in fact one of the US’ biggest mortgage lenders) has whipped it up again. The lender has demanded nine banks, including Barclays and Royal Bank of Scotland, pay it $800m (£499m) in damages.

A spokesman for the government-backed lender said the lawsuit will ‘recover losses it suffered as a result of the defendants’ manipulation of Libor’. The other seven banks being sued are Rabobank, UBS, Bank of America, Citigroup, Credit Suisse, Deutsche Bank and JP Morgan Chase.

Many of those have already admitted wrongdoing and settled with regulators: Barclays paid out £290m to US and UK authorities last year, while RBS paid out £390m a few months ago (so here's another reason why its privatisation might take longer than expected).

Dutch bank Rabobank is the latest to have been fined, when it was told to pay out £662m. That particular case wasn’t exactly a difficult one to pass judgement on: emails between traders and Libor submitters included comments like ‘Oh dear… my poor customers’, and ‘I am fast turning into your Libor bitch!!!’. MT can’t decide whether it’s less impressed by the sentiment, the language, or just the gratuitous use of exclamation marks.

This is an entirely predictable move by Fannie Mae: in March this year, its US rival (/elderly husband) Freddie Mac got the ball rolling by suing more than a dozen banks including Bank of America, JPMorgan Chase, UBS and Credit Suisse for damages relating to Libor, after reports suggested that between them, Freddie Mae and Fannie Mac could have lost more than $3bn because of the scandal.

Still: US companies and regulators seem to have benefitted disproportionately from payouts relating to Libor fixing. Take Rabobank’s fine: although some of the dodgy dealings took place in New York and Tokyo, the offences were mainly committed in Europe, by a European bank, against a European benchmark – but of the $1bn fine handed out, $475m went to the US Commodity Futures Trading Commission, $325m went to the US Department of Justice and just $168m went to the UK Financial Conduct Authority. That leaves Dutch and Japanese regulators with a combined total of $32m. Seems unfair…

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