The New York Times reports that there is now a pile-on of cities, states, and municipalities to lawsuits filed in Manhattan Federal Court against the banks that set the LIBOR rate, for having ripped off millions from them. These are cities and other government units that have torn up their budgets, laid people off, and in some cases been forced into bankruptcy. This is hugely explosive politically, especially if properly channeled to putting an end to the financial system which created and thrives on such misery, through LaRouche's Glass-Steagall policies.
The City of Baltimore and a pension fund in Connecticut, the City of New Britain's Firefighters' and Police Benefit Fund, are the first to sue, claiming the LIBOR manipulation cost them millions, according to NPR.
"Now, cities, states, and municipal agencies nationwide, including Massachusetts, Nassau County on Long Island, and California's public pension system, are looking at whether they suffered similar losses and are weighing legal action," the Times reports. Peter Shapiro, an investment advisor to Baltimore and other cities, told the Times that "about 75% of major cities have contracts linked to this" — the LIBOR fixing. "Unambiguously, state and local government agencies lost money because of the manipulation of LIBOR," said Shapiro. "The number is likely to be very, very big."
The banks targetted include Bank of America, JP Morgan Chase, Deutsche Bank, and Barclays. Darrell Duffie, a Stanford professor of finance, estimates that these lawsuits could result in the banks' having to pay out tens of billions of dollars, an estimate in line with recent report by Nomura Equity Research.
The Times story emphasized the losses to cities, etc. from transactions involving interest-rate swaps, just barely mentioning pension funds which lost income on their investments if interest rates were held artificially low.
The rather unlimited potential of these lawsuits was pointed out a week ago by, among others, the Seeking Alpha blog and the NY Times "Dealbook" blog. UBS and Barclays have already admitted to wrong-doing in their settlements with government authorities, and are cooperating with authorities, increasing the pressure on their co-conspirator banks to do the same. These admissions of misconduct will open the floodgates to civil lawsuits, since the proof of wrong-doing is already on the record. This also opens to door to a massive number of suits under U.S. federal anti-trust and racketeering statutes. Both the Sherman Anti-trust Act and the Racketeer-Influences and Corruption Organizations (RICO) Act allow for triple damages, and RICO furthermore allows for recovery of attorneys fees, an incentive for the filing of class-action cases.
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So get into the groove Harlem dudes and get that sweet money.
