2-21-18 12:05 PM EST | Email Article
By Lalita Clozel 

WASHINGTON -- The Federal Deposit Insurance Corp. on Tuesday sued 16 banks connected to the Libor rigging scandal as part of its effort to recover funds related to Doral Bank, a Puerto Rican institution that collapsed in 2015.

In its lawsuit, the FDIC argued the banks' collusion on fixing the Libor interest rate had hampered Doral's competitiveness by among other things breaching swap contracts with the failed bank.

"Doral and the [FDIC]'s injuries arose from the harm to competition" as a result of Libor fixing by the large banks, the complaint said. "These injuries flow directly from the substitution of collusion for competition in the market for [over-the-counter] interest-rate derivatives."

The FDIC's move follows an ongoing lawsuit filed by the FDIC in 2014 against the same large financial institutions accused of participating in a Libor manipulating scheme, including Bank of America Corp., Citigroup Inc., Credit Suisse Group AG and JPMorgan Chase & Co. The earlier lawsuit alleged Libor manipulations had harmed 38 banks the FDIC had placed in receivership after they collapsed.

Doral Bank was closed by Puerto Rico regulators in February 2015, in the largest U.S. bank failure since 2010. The bank, which shut down with $5.9 billion in assets, was sold to Banco Popular de Puerto Rico.

Write to Lalita Clozel at lalita.clozel.@wsj.com


(END) Dow Jones Newswires

February 21, 2018 12:05 ET (17:05 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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