WASHINGTON — Fannie Mae sued nine major banks on Thursday, alleging the banks’ participation in the rigging of a key global interest rate that cost the mortgage giant hundreds of millions of dollars.
The banks sued include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and others that set the London interbank offered rate, or Libor, which is the basis for trillions of dollars in contracts, including mortgages and bonds.
Fannie Mae says it lost $800 million from transactions that were based on the banks’ false submissions of their borrowing costs used to calculate the Libor.
The banks deliberately held down the value of Libor to benefit their trading positions and boost profits, Fannie Mae said.
Four of the banks — Britain’s Barclays and Royal Bank of Scotland, Switzerland’s largest bank UBS, and the Dutch Rabobank — have been fined a total $3.6 billion by US and British regulators for manipulating the Libor.
Spokesmen for Bank of America, Citigroup, and JPMorgan declined to comment on the lawsuit.
The other two banks sued are Germany’s Deutsche Bank and Switzerland’s Credit Suisse.
The lawsuit says the three US banks are among those still under investigation in connection with the alleged manipulation of the Libor.
In March, Fannie Mae’s smaller sibling, Freddie Mac, filed similar suits against 15 Libor-setting banks.
The inspector general for the Federal Housing Finance Agency reported last year that Fannie Mae and Freddie Mac together may have lost more than $3 billion on their transactions from the banks’ rate-rigging.
The Federal Housing Finance Agency oversees Fannie Mae and Freddie Mac, both of which were rescued during the 2008 financial crisis and are now government controlled.