NEW YORK TIMES: …Politicians in both London and Washington are questioning whether regulators allowed banks to report false rates in the run-up to the 2008 financial crisis and afterward. On Monday, Congress stepped into the fray, requesting information about the role of the Federal Reserve Bank of New York, according to people close to the matter…
Authorities around the world are now considering action against more than 10 big banks, including UBS, JPMorgan and Citigroup. The banks also face a raft of civil litigation from municipalities, investors and other financial firms that claim they lost money from the misreporting of rates. These lawsuits could end up costing the industry tens of billions of dollars, according to analysts.
In November 2007, Mr. Tucker led a meeting in which some officials raised concerns that banks were underreporting Libor submissions to temper concerns about their health, a process known as lowballing. It was in the earliest stages of the market turmoil that would culminate in the 2008 financial crisis, and banks were loath to report high rates that pointed to weak financial footing… (more)
EDITOR: This is a real mess. Keep in mind, overall every dollar overpaid because the rate was set too high, a creditor lost but a borrower gained. For every dollar underpaid because the rate was set too low, a borrow gained and a creditor lost. Those benefiting aren’t going to sue. But the banks may have to recompense those who lost!
