Libor Accords Leave Banks Facing ‘Massive’ State Claims

More than 12 states involved in investigation of what rate manipulation may have cost state and local governments.

A multistate probe of alleged manipulation of interest rates threatens to leave banks liable for billions of dollars in estimated state and local losses from the scandal, even as they settle with national regulators.

New York Attorney General Eric Schneiderman is helping lead a probe into claims that banks rigged global benchmarks for borrowing, adding to investigations by other authorities, including the U.S. Justice Department. Royal Bank of Scotland Group Plc agreed yesterday to pay about $612 million to U.S. and U.K. regulators to resolve their claims.

Floating Rates

Any investments in floating-rate securities tied to Libor also would have paid less in interest if the rate was suppressed. Shapiro said he doesn’t have an estimate for those damages.

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