News Summary: Freddie sues big banks over key rate
News Summary: Freddie Mac accuses banks of rigging key interest rate, triggering huge losses
TARGETS BANKS: 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.
THE CASE: Freddie sued 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. Spokesmen for JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. declined to comment on the suit.
THE STAKES: Freddie didn't estimate its losses due to LIBOR. But 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' rate-rigging.