Freddie accuses big banks of rigging lending rate

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Associated Press

Posted on March 20, 2013 at 10:00 AM

Updated Wednesday, Mar 20 at 10:02 AM

WASHINGTON (AP) — 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 government-controlled mortgage giant.

Freddie filed the lawsuit Thursday in federal court in Alexandria, Va. It names the banks that set the London interbank offered rate, known as LIBOR, which provides the basis for trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Two big British banks and Switzerland's largest have been fined hundreds of millions of dollars for manipulating LIBOR by U.S. and British regulators.

A U.S. watchdog has found that Freddie and its larger sibling Fannie Mae together may have lost more than $3 billion on their investments from banks' rigging of the rate.

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