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Fannie Mae sues 9 giant banks over Libor losses

Fannie Mae's headquarters in the nation's capital are seen November 9, 2011 in Washington
Fannie Mae's headquarters in the nation's capital are seen November 9, 2011 in Washington

Fannie Mae Thursday sued nine giant banks plus the British Bankers Association over some $800 million in losses due to alleged rate-rigging manipulation in the latest fallout from the Libor scandal.

A spokesman for Fannie Mae said the government-backed mortgage lender "undertook the suit out of a responsibility to be good stewards of our resources."

In its filing with a federal court in New York, Fannie Mae said it had entered into a "huge volume of transactions" indexed to Libor, or the London Interbank Offered Rate, in which it presumed "an honest Libor rate" determined "in good faith."

However, the banks, along with the BBA, "wrongfully" manipulated Libor, a global benchmark interest rate that is calculated daily, using estimates from banks of their own interbank rates, Fannie charged.

The complaint cited recent settlement in which four of the banks acknowledged to regulators wrongful or manipulated submissions. The four banks are Barclays, UBS, RBS and Rabobank.

The other five banks named as defendants are "all the subject of regulatory investigations regarding alleged Libor manipulation," Fannie said.

Those banks are Deutsche Bank, Credit Suisse, Bank of America, Citigroup and JPMorgan Chase.

Of the approximately $800 million in damages, Fannie Mae said it lost $332 million on interest-rate swaps with the banks.

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