Banks recently won a major legal battle against LIBOR lawsuits. A Federal Judge dismissed LIBOR lawsuits agsinst 16 banks, mostly because the plaintiffs couldn’t remove all of the obstacles to show how they have been harmed by violations of the U.S. Antitrust Laws. JP Morgan Chase and of course Bank of America were 2 of the banks.
This goes bank to the 2012 LIBOR scandal. It was admitted that banks were manipulating this key interest rate, which effects everything from municipal borrowing to derivatives. The court apparently doesn’t care, Republicans don’t care. So who really cares?
The people who were harmed care. Municipal borrowers and counterparties in derivative trades were harmed. But showing how theg were harmed is the problem. LIBOR rates of different durations were generated everyday. It hit investors and borrowers worldwide a tiny bit at a time. How woukd this be added up? The estimates in how much banks would pay in LIBOR lawsuits range from $7.8 billion to $176 billion.
In the cases dismissed, the plaintiffa included pension funds and money managers like Charles Schwab. They argue that they were cheated on bond income because LIBOR rates were to low during the financial crisis. Barckay’s, UBS and the Royal Bank of Scotland have payed out $2.5 billion to settle charges that they were manipulating rates.
LIBOR determines the benchmark rate at which many of the world’s largest banks are able to borrow money. It is done by surveying representatives from 18 major global banks. The rate impacts short-term interest rates for a variety of financial instruments and investments.The lawsuits claim the defendants colluded to artificially suppress LIBOR for the benefits of individual traders.
Attorney General Eric Holder said the economic reach of larger finacial institutions has had an inhibiting impact on prosecutions against banks. Elizabeth Warren, Democrat and Charles Grassley, Republican, cited Holder’s comments when they pushed for tougher settlements in cases against banks. That is a welcome departure from Republicans normal unending support of big banks. Republicans are the banks personal lobbyist. Maybe it is time for Too Big To Fail to find themselves in jail.