Tags: libor | losers | Cities | scandal

Fortune: Big Losers in Libor Scandal May Be Cities Like Baltimore, Boson

By    |   Thursday, 12 Jul 2012 11:24 AM

The big losers in the Libor trading scandal may be cities such as Baltimore, New York and Boston.

Baltimore is the lead plaintiff in a class action suit against Barclays and other banks that claims the Maryland port lost money due to manipulation of the London interbank offered rate, or Libor, Fortune reported. (The Libor is commonly defined as the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks).

Banks’ alleged manipulation of the Libor may have cost towns, hospitals and other non-profits as much as $600 million a year, Fortune cites one expert, municipal funding adviser Peter Shapiro, as saying.

Libor-based financial contracts played a key role in leading to the bankruptcy of Alabama’s Jefferson County.

Manipulation of the Libor may have cost 12 transit authorities across the country, including those in New York and Boston, nearly $100 million, according to a recent report from SEIU labor union, Fortune reported.

New York’s Nassau County comptroller says Libor manipulations might have cost his county as much as $13 million on deals related to $600 million of outstanding bonds.

Hospitals and colleges are also likely to emerge as big losers in the scandal, according to experts.

"Municipalities are desperate not to raise taxes," says Robert Fuller, who advises cities on bond deals. "So when they see a way to save money they are more likely to jump at it these days," he said.

"City financial managers were outwitted by Wall Street,’’ he said. "Were they cheated? I don't know."

A statement from the Federal Reserve of New York released Monday said as long as fours ago the bank had received "occasional anecdotal reports from Barclays of problems with Libor," CNNMoney reported.

The New York Fed said it asked Barclays in 2008 after the failure of Bear Stearns how its Libor submissions were being carried out.

"We subsequently shared analysis and suggestions for reform of Libor with the relevant authorities in the U.K.," the statement said, according to CNNMoney.


© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
337
2012-24-12
Thursday, 12 Jul 2012 11:24 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved