A group of homeowners filed suit against several major banks, alleging that from 2000 through 2009 the banks helped manipulate London Interbank Offered Rates to increase the payments on adjustable-rate mortgages for homeowners affected by interest rate changes, HousingWire reported Oct. 15.
LIBOR serves as the benchmark for where rates sit on mortgages, credit cards, student loans and other loan products.
The suit, Adams et al. v. Bank of America Corp., was filed in the U.S. District Court for the Southern District of New York and accused the banks of fixing the LIBOR rates for financial gain in their respective roles as the key data providers, HousingWire reported.
The homeowners alleged that the banks violated the Racketeer Influenced and Corrupt Organizations Act, a federal law designed to eliminate organized crime and one that allows prosecution and civil penalties for racketeering activity involved in ongoing criminal enterprises or other unsavory business practices.
The plaintiffs hope to prevent the banks from perpetuating any type of monopoly where price fixing and other forms of connivance can be used to make homeowners and others affected by the rates pay more than necessary, HousingWire reported.
The defendants in the case include Bank of America, Barclays, JPMorgan, Citigroup, Credit Suisse, Deutsche Bank, HSBC Holdings, Lloyd's Banking Group, Royal Bank of Canada, Royal Bank of Scotland and UBS.