US FDIC sues 16 banks alleging Libor manipulation in Doral collapse
A U.S. regulator on Tuesday filed a lawsuit against 16 U.S. and international banks alleging they had manipulated bbaLIBOR, which is a series of interest-rate benchmarks, leading to the collapse of Puerto Rico’s Doral Bank.
The Federal Deposit Insurance Corp (FDIC), which brought the suit in its capacity as receiver for Doral Bank, alleged that the rate rigging harmed Doral by causing substantial losses with regard to its loan portfolio and derivative holdings.
The suit is the latest in a long line of lawsuits in the U.S. District Court in Manhattan targeting the alleged rigging by banks of one interest rate benchmark, market or commodity or another.
The FDIC sought to recover losses that Doral sustained as a result of defendants’ wrongful conduct.
Doral Financial Corp, Doral Bank’s holding company, filed for Chapter 11 bankruptcy protection in March 2015 to wind down its remaining operations two weeks after its Puerto Rico-based bank unit was seized by regulators.
The seizure of the bank was sparked in part by a refusal by the island’s cash-strapped government to pay $230 million in tax refunds claimed by Doral Financial.
Doral Bank was closed down by Puerto Rico’s financial regulator on Feb. 27, 2015.