The Federal Deposit Insurance Corp. has sued 16 big banks that set a key global interest rate, accusing them of fraud and conspiring to keep the rate low to enrich themselves.
The banks include Bank of America, Citigroup and JPMorgan Chase in the United States.
The FDIC says it is seeking to recover losses suffered from the rate manipulation by 10 U.S. banks that failed during the financial crisis and were taken over by the agency. The civil lawsuit was filed Friday in federal court in Manhattan.
The banks rigged the London interbank offered rate, or Libor, from August 2007 to at least mid-2011, the FDIC alleged. The Libor affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans. A British banking trade group sets the Libor every morning after the 16 international banks submit estimates of what it costs them to borrow. The FDIC also sued the trade group, the British Bankers’ Association.
By submitting false estimates of their borrowing costs used to calculate Libor, the 16 banks “fraudulently and collusively suppressed [the Libor rate], and they did so to their advantage,” the FDIC said in the suit.
Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the suit. Spokesmen for Bank of America and JPMorgan did not immediately return requests for comment.
Four of the banks — Britain’s Barclays and Royal Bank of Scotland; Switzerland’s biggest bank, UBS; and Rabobank of the Netherlands — have previously paid a total of about $3.6 billion to settle U.S. and European regulators’ charges of rigging the Libor. The banks signed agreements with the Justice Department that allow them to avoid criminal prosecution if they meet certain conditions.
— Associated Press
● Weapons maker Lockheed Martin paid chief executive Marillyn Hewson $25.2 million in 2013, more than doubling her compensation in her first year in the job, according to a regulatory filing. Hewson’s base salary jumped 85 percent to about $1.4 million last year. Her stock awards increased to about $8.2 million from about $877,000, Lockheed said in a filing with the Securities and Exchange Commission. Hewson, who took the top job in January 2013, had a total package of $11.4 million in 2012, when she became chief operating officer.
● The Panama Canal Authority’s board of directors has voted to approve a deal to end a dispute over $1.6 billion in cost overruns with the European-led construction consortium that is expanding the waterway. A statement Friday from the authority said it and the consortium led by Spain’s Sacyr will each inject $100 million to resume work. The deal is aimed at allowing the project to finish by December 2015. The $5.25 billion expansion project will allow extra-large tankers and container ships to use the Panama Canal.
● Quiznos filed for Chapter 11 bankruptcy protection to reduce its debt by more than $400 million after the chain lost ground to competitors. The toasted sandwich company said the move won’t affect its customers. The Denver-based company owns and operates only seven of the nearly 2,100 Quiznos restaurants. The rest are owned and operated by franchisees and aren’t part of the bankruptcy proceedings.
● Keurig said it signed a multiyear deal with Peet’s Coffee & Tea to make K-Cups of its coffees and teas for Keurig coffee machines. Keurig also changed the terms of its existing five-year contract with Starbucks. Starbucks said it agreed to give up its right to be the only provider of premium coffee for Keurig’s machines, which make coffee one cup at a time. That opened the door for Keurig to do business with Starbucks rivals, such as Peet’s. In exchange for ending its exclusivity rights, Starbucks said it will provide more types of coffee for Keurig machines and will receive “improved business terms.”
● Tesla Motors escalated its war of words with New Jersey, lambasting a regulatory change approved by the state this week that bars the electric automaker from selling vehicles directly to the public. Tesla is studying “judicial remedies” to fight the ruling, chief executive Elon Musk said in a sharply worded blog post. The ruling, approved by New Jersey Gov. Chris Christie’s administration, requires sales of all new cars to go through dealer franchises.
— From news services