Fannie Mae and Freddie Mac may have lost more than $3 billion tied to the rigging of a key interest rate, according to internal memos by the auditor of the Federal Housing Finance Agency.
Inspector general Steve Linick urged FHFA acting director Edward DeMarco in a Nov. 3 memo that has not been made public to investigate the potential losses tied to manipulation of the London Interbank Offered Rate.
“We conducted a preliminary analysis of potential Libor-related losses at Fannie and Freddie and shared that with FHFA, recommending that they conduct a thorough review of the issue,” Kristine Belisle, a spokeswoman for the inspector general, said in an email. “FHFA agreed to study the matter further.”
UBS AG, the Zurich-based bank, agreed to pay about $1.5 billion to settle charges with U.S. and U.K. authorities for manipulating interest rates including
The charges are the first brought by U.S. officials against individuals alleged to have manipulated Libor and comparable benchmarks in Europe and Japan.
Denise Dunckel, a spokeswoman for FHFA, said the regulator of Fannie Mae and Freddie Mac had not substantiated any Libor-related losses at either of the two mortgage-finance companies.
Fannie Mae and Freddie Mac rely on Libor to determine interest payments on their investments in floating-rate financial instruments such as bonds and swaps.
