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By Nate Raymond and Aruna Viswanatha
NEW YORK/WASHINGTON, March 14 (Reuters) - The FederalDeposit Insurance Corp sued 16 of the world's largest banks onFriday, accusing them of cheating dozens of other now defunctbanks by manipulating the Libor interest rate.
The global financial institutions broke certain swapscontracts they had entered into with the now-closed banks, byseparately colluding to rig the Libor rate to which thecontracts were tied, the FDIC said.
Some of the banks accused in the lawsuit, including BarclaysPlc and UBS, have already paid some $6billion to resolve charges from U.S. and European authoritiesthat they worked to manipulate benchmark interest rates.
They have also been sued by investors and others who claimthey lost money due to the manipulation. A federal judge lastMarch dismissed many of those claims that were based onantitrust law, but has yet to rule on cases that rely on the"breach of contract" theory used by the FDIC.
"These look very much like claims that I think are going tohave a much better chance with the court," said Daniel Brockett,a lawyer with Quinn Emanuel Urquhart & Sullivan who had broughtother cases against banks over Libor manipulation.
A representative of the FDIC declined comment.Representatives of the banks declined comment or did not respondto a request for comment.
Libor, which is the average rate that a panel of banks saythey can borrow unsecured funds, has become a key rate globally,underpinning more than $550 trillion in financial products, fromhome loans to derivatives.
"SUBSTANTIAL LOSSES"
The financial institutions' conduct caused "substantiallosses" to 38 banks that the U.S. regulator had taken intoreceivership since 2008, including Washington Mutual Bank andIndyMac Bank, the FDIC said.
The regulator did not quantify the losses at issue. Thelawsuit also did not specify what damages the FDIC is seeking.
The lawsuit also accused the British Bankers' Association,the U.K. trade organization that during the period at issueadministered Libor, of participating in the scheme.
The BBA had said it independently monitored the banks' Liborsubmissions, and represented that Libor was a "transparent"benchmark, even though it knew those statements were false, theFDIC said. A representative of the BBA declined comment.
The banks named as defendants include Bank of America Corp, Citigroup Inc, Credit Suisse Group AG,Deutsche Bank AG, HSBC Holdings PLC,JPMorgan Chase & Co, and Royal Bank of Scotland GroupPLC.
Other defendants in the lawsuit are Rabobank, Lloyds BankingGroup plc, Societe Generale, Norinchukin Bank, Royal Bank of Canada, Bank ofTokyo-Mitsubishi UFJ and WestLB AG.
The case is Federal Deposit Insurance Corporation, et al, v.Bank of America Corp, et al, U.S. District Court, SouthernDistrict of New York, No. 14-1757.
