FHFA Denies Reports That GSEs Lost Billions In LIBOR Rigging

Posted by Orb Staff on December 20, 2012 No Comments
Categories : Residential Mortgage

12955_fhfa-02595023 FHFA Denies Reports That GSEs Lost Billions In LIBOR Rigging The Federal Housing Finance Agency (FHFA) is disputing news reports that Fannie Mae and Freddie Mac lost billions of dollars as a result of the manipulation of the London Interbank Offered Rate (LIBOR) by major banks.

The Washington Post says that it obtained an internal memo written by the FHFA's Office of the Inspector General, which said the illegal manipulation of LIBOR caused the government-sponsored enterprises (GSEs) to ‘lose billions of dollars on their holdings of more than $1 trillion in interest-rate swaps, floating-rate bonds, mortgage-backed securities and other assets linked to LIBOR.’ The inspector general also recommended that the FHFA begin its own review of the matter and consider the possibility of filing lawsuits against the banks involved in the LIBOR affair.

However, the FHFA issued a press statement that categorically denied that the GSEs lost money as a result of the LIBOR rigging.

‘FHFA has not substantiated any particular LIBOR-related losses for Fannie Mae and Freddie Mac,’ the regulator said in its statement. ‘We continue to evaluate issues associated with LIBOR and monitor LIBOR-related developments, recognizing that other federal agencies are also involved in related matters. FHFA has not made any determination regarding legal action.’

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