The LIBOR scandal just got bigger.
The Wall Street Journal reported last night that nine more banks have been subpoenaed (paywall) to testify before US authorities over the interest rate-rigging scandal that broke this summer. Banks have been accused of rigging the London Interbank Offered Rate, a benchmark rate on more than $300 trillion worth of business loans, home mortgages, and other financial products.
Bank of America, Bank of Tokyo Mitsubishi, Credit Suisse, Lloyds, Rabobank, Royal bank of Canada, Société Générale, Norinchukin Bank, and West LB.
Seven other banks have previously been subpoenaed including: JPMorgan Chase, Barlays, Deutsche Bank, Royal Bank of Scotland, HSBC Holdings, Citigroup, and UBS.
The invitation to testify before a US investigating committee (headed by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen) does not mean the banks’ executives have done anything wrong. But if found guilty, the proceedings could lead to civil actions related to breaches of antitrust and fraud laws. UK and Japanese authorities are also investigating.
So far, only Barclays has paid for any involvement: a $450 million fine to US and UK regulators for attempted rate manipulation, while top executives resigned. Some UBS employees agreed to a plea bargain with US prosecutors to shield themselves from potential criminal prosecution. Other banks’ employees are expected to do the same.
The size of the scandal will likely get bigger in the coming months. In addition to these official probes, dozens of lawsuits, including by homeowners who claim they paid more for mortgages because of rate-rigging, are currently being reviewed by a New York judge.