Business

Freddie accuses big banks of rigging lending rate

WASHINGTON — Freddie Mac has sued 15 big international banks, including JPMorgan Chase, Bank of America, and Citigroup, accusing them of rigging a key interest rate and causing huge losses for the mortgage giant, which is controlled by the government.

Freddie filed the lawsuit Thursday in federal court in Alexandria, Va.

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It names the banks that set the London interbank offered rate, known as LIBOR, which provides the basis for trillions of dollars in contracts worldwide, including mortgages, bonds, and consumer loans.

In a growing scandal, two big British banks and Switzerland’s largest have been fined hundreds of millions of dollars for manipulating LIBOR by US and British regulators.

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A US watchdog has found that Freddie and its larger sibling Fannie Mae together may have lost more than $3 billion on their investments from banks’ rate-rigging.

The banks schemed together daily to manipulate and hold down the value of LIBOR from August 2007 through at least May 2010, Freddie alleges in its suit.

Spokesmen for JPMorgan Chase & Co., Bank of America Corp., and Citigroup Inc. declined to comment on Freddie’s suit.

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The legal action by Freddie adds to a flurry of lawsuits filed by cities and municipal agencies in the United States against some of the banks that set the LIBOR.

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