US Homeowners Launch Class Action Suit Against LIBOR-Manipulating Banks

Tyler Durden's picture

Nearly four years ago, we started a series of articles in which we methodically presented evidence that LIBOR was manipulated. Then, in late June, the biggest (to date) bank conspiracy was exposed, in which it was found beyond a reasonable doubt that at least one, and in many case all (including the BOE and Fed) were if not engaging, then certainly aware of numerous instances when daily USD LIBOR fixing was fudged one way or another for various non-fiduciary, read illegal purposes. When our conspiracy theory was confirmed to be conspiracy fact (as usual), we suggested the following: "Our advice to anyone who had an adjustable rate mortgage in the period between 2005 and today: speak to a lawyer immediately about suing the living feces out of Barclays, and all other banks who crawl out of the woodwork with purported settlements. Because due to their undisputed mark manipulation, it is absolutely safe to say that ARMs, which rely on Libor for interest rate formation, were grossly manipulated by the same idiot traders who left written evidence of their manipulation year after year. Now it is their turn to pay." As of last night, this too has occurred, after several homeowners, aka Adams et al (Southern New York, 12-cv-07461) launched a class action lawsuit against Bank of America and all other LIBOR banks, accusing the defendants of "unjustly enriched themselves" by manipulating the rate, which allowed them to increase the payments by homeowners on adjustable rate loans, and boosting profits.

This is merely the beginning: very soon, as expected (and as confirmed by surging legal fees and rapidly rising, but nowhere near rapidly enough, legal reserves) any and every homeowner will be seeking some form of equitable treatment for being taken advantage of in what until now was seen as an impossible act of mega collusion, for the very same reasons why time after time the sanctity of BLS and other US-sourced data is taken for granted: it just can not happen. Until it does that is, and it is in the interest of some overzealous DA to expose the corruption to its rotten roots.

Form Bloomberg:

The plaintiffs asked for class-action status, a jury trial, cash compensation and an order permanently blocking the banks from rigging Libor. Class-action status allows plaintiffs more leverage in negotiations with defendants. Lead plaintiffs direct the litigation on behalf of the group, determining strategy while usually reaping the largest share of any verdict or settlement.


Barclays Plc (BARC), Britain’s second-biggest lender by assets, is the only bank to have settled with regulators over the rigging of Libor. The London-based company paid a record 290 million pound ($469 million) fine in June. Chief Executive Officer Robert Diamond and Chairman Marcus Agius resigned in the aftermath.

Those wishing to enjoing the class action lawsuit are urged to write to the Plaintiff's attorney:

John Walter Sharbrough
John W. Sharbrough, III, PC
114 Eaton Square
Mobile, AL 36608
(251) 432-1441
Fax: (251) 432-5297

Full complaint presented below in its entirety.


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Lost Wages's picture

Ben will need to leave the printing press on overnight to pay the settlement for the banks.

prains's picture

24' cube vans will be in short supply very soon

fonzannoon's picture

I am a little lost here. Didn't anyone with an adjustable rate loan in that period, and ever since, benefit from rates being manipulated down? I would think it would be municipalities and certain bond holders (floating rate?) that would be pissed off and launching suits.

Seasmoke's picture

yes i am missing this one too.....its seems ARM were able to pay less and the fixed rates seemed to pay more

Plymster's picture

Yes, you would think it would be savers and bond holders suing the fuck out of the banks.  For example: Injured party stashed $100,000 in a CD yielding 1% based on the fact that the bank can get a better rate from LIBOR.  But for that manipulation, the CD should have been yielding 2%.  Injured party wants his $2k per year for the last 20 years of known LIBOR manipulation.

ParkAveFlasher's picture

I had an ARM at that time but I lost it in a boating accident.

CPL's picture

Why?  Municipalities took it as a boom and adjusted property taxes accordingly.  They benefitted while the market was hot, now that it is not.  Everyone is fair weather friends in that situation.  

The home owners, the banks, townships and municipal levels are all in the same greed powered boat that is out of fuel.  Again...nobody but the lawyers benefit here.  Waste of money and time.

fonzannoon's picture

Muni's could have been issuing bonds at much higher tates. They would have "adjusted" property taxes anyway.

edit- I meant rates but I am leaving tates. It looks funny.

waterhorse's picture

"Again...nobody but the lawyers benefit here."

So your answer is to ignore outrageous frauds because the lawyers will profit.  Got it.  Which TBTF do you work for?

CPL's picture

It's a moot point.  System is broken and like NDAA, SOPA and all the rest, guess what?  Nobody in the government gives a flying fuck.  Nobody.  You've been bamboozled, screwed, scammed, stolen from and here you are alive and hopefully healthy.


I'll restate, waste of time and energy.  If you were given the opportunity to attempt to salvage less than 2% of your price in court is that a tiny boon, a boon you could gain back by the numerous opportunities in scrap and salvage.  Or a minor distraction from other major problems both local, domestic and international.


Seriously they are only talking a couple of grand here.  If you junked and scraped 40 tube tv's (copper, aluminium, nickle...older the tv the better) that's around 1500 in your pocket for about a day's work.  Believe me, put an ad in craigslist and say you do electronics recycling, pick up an old tub to contain the glass from the tube.  Bam.  Money in your pocket.


That generous "offer" by the lawyers is faustian at best, then a complete and total paper work nightmare at worst.  Do yourself a favor and let it go.  The price isn't coming back and things need to get done regardless of the wishes of a bunch lawyer thinking up ways to shake the pennies left out of people's pockets.  There is a small and insignificant "win" if waiting for that train to come in.  If you are proactive and put your energy into other things, you win, not lawyers, courts, banks or the government.  You win.


How's that for an offer?

MachoMan's picture

Realistically, as an individual, it would be cost prohibitive to pursue a lawsuit...  However, as a class, it is not.  At the end of the day, these folks are going to have to sign up for the class and send in de minimis paperwork...  someone else will likely be doing everything else.  Sit back and collect a check.  Cash the check and split it between deleveraging and the purchase of inflationary hedges. 

CPL's picture

It's the amount of time involved.  It is the only commodity on the planet that is really worth anything.  Gold, silver, dollars, oil are all methods of transferring time and effort.

A couple of grand might make the difference in someone's household, agreed, but legal stuff is a "hurry up and wait" situation.  It might be ten years, might be never.  This is only the lawyers putting out the call for clients, it's not the class action suit itself.  This is the paper work time.  I'm hoping people keep the reward in perspective to what it really is worth.


If the settlement comes in five years, what is a couple of grand going to be worth?  Nothing if the printing continues.


In the current print hell or come high water situation, the unintended consequence is people waste the one thing they can never buy or get back.  Their time.  Salvage that and any individual wins, system loses.  Four years ago I was spitting teeth with the Tylers and everyone else in the Alt-econ circles on the matter.  If the suit came out might have been worth the effort.


Now medium ground beef is 5 bucks a pound, bread made with real flour is 4 bucks a loaf and milk is breaking it's regressive pricing structure to 10 bucks in Canada, not just here in a resource rich nation, it's everywhere now.  Those three things count for more than a lawyers legal wet dream.  The civil suit serves no purpose but strawman to slap around and is as contrived as the US presidential elections.  It sucks ass, but that's the world now.

MachoMan's picture

You're dancing all around it...  How does someone waste their time filling out paperwork for a couple hours to make a few grand?  The lawyers are doing all the work...  all the claimants need to do is fill out a claim and provide de minimis documentation...  [even if they won't provide it, the documentation should be available through discovery, in which case the claimants won't have to do anything to prove their own cases].

The time is going to be nothing for the claimants.  You might say it's a waste of time to file, and you may be correct, but it isn't your decision...  if time is going to be a real constraint, then I can't fathom how you would overlook opportunity cost in your evaluation.  The simple fact is that most people have ZERO opportunity cost in spending a few hours filling out a claim...

The lawyers may win some incredibly large spoils...  but this is also what incentivizes them to be the first mover...  and to get these cases heard and in the spotlight.  Right or wrong, it's the policy decision we have made.

CPL's picture

Correct, but do you really want to feed the beast more money?  This is a systemic problem, not a legal one at this point.  The system rewards loss as frequently as gains, legitimate or not.  Morally it's the correct course of action.  Ethically it is the exact reason we are in the place we are today.


No, starve it to death and let it die.  If I want to keep rabbits out of my garden, I could sit next to my garden armed and ready.  Or I could invest into the high technology of a stick, a string and a pie plate to spook critters that eat my garden.  My folly in the situation is if I buy into letting the rabbits into my garden paradim is in eight weeks I'll have more rabbits and less garden.

MachoMan's picture

How does extracting money from the banks via a class action lawsuit "feed the beast more money"?  Further, if money will be printed either way, then what negative impact does mitigating the cantillon effect have?  You're dancing around it still...

CPL's picture

It's called insurance.  The Banks have it, they own the insurance industry.  We live in a FIRE economy with all the worst aspects of keynesian ideology and complete and total hegemonic control over all aspects of it.

Who will the cost of the settlement be downloaded to?  

You and I and because the cantillon effect is not just reserved for commodities and goods.  The Insurance industry will, can and does pass those costs to everyone.  They are the industry that wrote the book on paying Peter, to pay Paul to pay Mary.  The insurance industry, just like a casino will squeeze the "winnings" out of their hands regardless.


Expecting the devil to cut you slack under contract is a little stupid.  Especially the banking and insurance industry, which are one and the same beast.

MachoMan's picture

Are you planning on ever addressing my point?  What does any of that have to do with whether or not it is good for someone to participate in the class action suit?  All you're telling us is that the banks will be bailed out from any losses.  Ok.  However, that is irrelevant.  The entire post is off the mark.

If you're attempting to impose some mathematical nullity, then that too is overbroad in that not all of the claimants will pay insurance premiums equally...


pufferfish's picture

Agreed, if you chase this: Your a welfare queen. We all know where the money for the settlement came from. Your own pocket.

Get off your ass and aid the changing of the system. If enough people did this rather than chance further.


There again, maybe this is aiding the system…


Who knows, its a real mess in there.

CPL's picture

Like the Chinese Fin Minister talked about last week.  It's a mess, everyone should catch their breath for a year and take stock of what the options are.  

Too much reaction, too many committees, too much linear scale, too broad of a lateral scale.  We live in an age of excess and there is no greater temple to it than the FIRE industries.

emersonreturn's picture

i know lawyers totally pissed and totally willing to work for free simply to begin to take back some power, basically to  begin...they are as abused by TPTB as i am.  it's important to fight on as many fronts as possible. IMO. dissent one step at a time.  refuse to pay taxes...IMO, that's the next step, after refusing to enter the world of credit and banks.

Thisson's picture

Perhaps, but here there are no provable damages.  Causation is also at issue.  This case is a LOSER.

MachoMan's picture

Damages will be proven by a battle of the experts...  as will causation.  In the end, it's going to be poor pitiful harriet homeowner versus assclown bank...  who is the jury going to side with?

CPL's picture

These are the same experts that were ignored and belittled for their findings in 2006-2007.  Nothing has changed in their presentation and optics.  Slightly more people understand the situation now and are waking up to the fact they don't have a home anymore or a pot to piss in.


...and why would you assume a Jury would be involved?  Deliberations can also be done by a single judge assigned to the court appointment out of a pool.  I hardly expect the same amount of coverage as something like OJ simpson in the 90's.  I would accept in a fair legal universe that there would be a hope in hell of seeing justice and remittance given but we don't live in that universe.  We live in this one where shenanigans and loading a court room is easy as court process submissions for a couple of bucks.  

Again.  The rule of law is no longer appearent so expect an outcome that reflects that.

MachoMan's picture

False dilemma....  and misdirection through argument from induction...  the fact that people were ignored in 2006 as general market announcers has nothing to do with what a jury would decide when presented solely their testimony and tasked with choosing a winner.  Whether a juror is an expert about a particular issue going into the lawsuit has nothing to do with whether they will have any knowledge coming out of the lawsuit...

A jury will be involved because a jury trial has been demanded...  as a matter of right...  [it helps if you would actually look at the complaint].  A judge will handle class certification, among many other things, but this one will go to the jury if it isn't knocked out via dismissal or summary judgment.

You are speaking about general ills of the legal system without applying them to this case.  Complaining because this case will not get as much coverage as the OJ case has nothing to do with whether there will be a fair trial... 

The rule of law is completely apparent...  it is the law after all...  the question is whether it will be upheld, as written... 

CPL's picture

Then there is nothing I could do to convince you of the potential of time wasted, you are programmed to believe that the system can generate an outcome to the home holders benefit and you are happy enough chewing on that bone. 

As the devils advocate in this discussion, I see it as the defense's position to illustrate fault of homeowners for ignoring due diligence and caveat emptor.   I personally would examine every last one of the names on list to see if any of the claimants had reneged on their contractual obligation to pay their mortgage.  All it would take is a handful for a Judge to tell the lawyer's acting on behalf of the litigants to go sharpen the pencil and come back later.


If the lawyers acting on behalf of the US Homeowners Association wanted to effectively put target on the back of someone they would perform a tactical raid.  Always with the individual court cases when the subject should be broken down into smaller litigation chunks.  David and Goliath nonsense, better to swarm and occupy their entire defense team with 1000's of legal requests.

You want to win fast?  Zerg the fuckers. 

Don't let their lawyers catch their breath and as another poster mentioned, there are thousands of lawyer eating dog food right now.  There's your paper processing army.  Don't care how many senior partners they have on staff, you go after their logistics. 

You have the numbers.  Act like it.  You can make sure all their precious sailing weekends are simply ruined for five years.  By the end of it your end goal is to burn them out professionally.  Give them no sleep for years, break them from mind to soul.  Crush them with their job.  You can do nothing to change the shape of the world, but you can take chess pieces off the board.  Run them to the end of the world with Entropy and beg for death or a new career.   

Again.  Waste of time in the current form.  You want to go to war, you bring an army, not a greeting party.  Feel like I'm having a conversation with the OWS organizers on operational placement....shades of last year

Dr. Engali's picture

Yeah it doesn't make much sense to me either. I must be missing something.

francis_the_wonder_hamster's picture

Keeping rates artivicially low enticed homebuyers to make imprudent purchases that they otherwise probably would/could not have made.  Lower rates mean more people can buy, even when they shouldn't.  That's basically the lawsuit......although I'd love to hear the case made against the destruction of proper price discovery in home prices.

ParkAveFlasher's picture

Listen, to dispel the myth yet again, if you bought the right house in the right location at the right price it doesn't matter who what where how and why you financed it. 

If you didn't buy the right house in the right location at the right price, I feel for you, but only a little bit.

Nobody For President's picture

Better was to buy the right land at the right time and the right price and build your own fucking home - a home to live in, not a god damned investment - and build it a month at a time, a few boards at a time - no mortgage, no debt, no payments to the steenkeen bankers.

Worked for me - can for you young 'ens.

ParkAveFlasher's picture

Get me on that boat! 

Did you rent equipment to dig the foundation as well?  Just curious.  I put a lot of sweat equity in my own home, replacing the kitchen and bath myself as well as all electrical, water and waste. 

CPL's picture

Depends on the type of foundation.


Concrete slab is cheapest and shittiest in terms of resale but it is the easiest to maintain obviously.   Cracked foundations on a slab doesn't matter much, your subfloor, insulation and placement of the plumbing does. 

Make plans to include 400 sq ft on the main floor of the building to keep HVAC/Electrical/water otherwise you'll build a beautiful place with zero home services...well unless you are building a cottage.  Then think tiny and subsitution.  My parents place is on a slab on the Canadian Shield, but with some tweaks to how the wood stove distributes heat and some forced air duct work acting as a boiler for both the water and the central house heating.  We've nearly got it off the grid completely. 

Concrete basement acting as your "container" for heat/water/electrical is more expensive.  My second oldest son works in construction after school and for a 45 by 80 basement insulated and with weeping tile starts at around 70-110k (depending on quality of concrete and the person pouring it, not the company) with permits and inspection.

Dr. Engali's picture

By that measure shit maybe Sueing the Federal Reserve too? The Federal Reserve is the largest manipulator of rates in the world.

koncaswatch's picture

Your comment on "price discovery"... priceless!

fuu's picture

Didn't the manipulated rates induce the bubble/boom?

jayman21's picture

I am a little lost here. Didn't anyone with an adjustable rate loan in that period, and ever since, benefit from rates being manipulated down? I would think it would be municipalities and certain bond holders (floating rate?) that would be pissed off and launching suits.


I had the same thought.  I had a look at the compliant.


page 14:

61.Defendants, the banks that comprised the U. S. dollar LIBOR panel during theClass Period (as defined below), were motivated to manipulate and increase LIBOR on or aboutthe first day of each month because they knew that most adjustable rate mortgages and promissory notes contained a clause establishing the first day of the month as a “Change Date”and that the new rates would be set on that day.

fonzannoon's picture

This is why I was a B- student and you were obviously an A student. You made it to page 14 and I made it to "US Homeowners Launch Class Action Suit Against LIBOR-Manipulating Banks"

I still think the municipalities and floating rate bond holders have a real case. I will hold my breath and wait for Fidelity to do the right thing...

jayman21's picture

I would love to see something done.  The whole system is rotting to its core.  Maybe enough of the sheep will wake up and begin the reset process.  From here, I have not see any reset and in fact I would argue that the cronyism has gotten worse.  Where is Jon Corzine?

fonzannoon's picture

If I had a silver dime for everytime someone around me shrugged their shoulders and mumbled "there is nothing we can do about it" I would have a lot of silver dimes.

jayman21's picture

I think you would very quickly see a shortage of silver dimes.

AlaricBalth's picture

On July 13, 2012 I posted the following;
"Large pensions use asset-swapped derivatives to receive Libor plus margin in an attempt to maximize their return. Suppression of Libor rates would have lowered the yield of these swaps."

If anyone has a case against the Liborgate banks it is the large public and private pension plans. Basically, any receiver of interest indexed to Libor.

Thisson's picture

I think you're incorrect, because most pensions can't invest in instruments of that nature.  Municipalities, yes.  Pension funds, no.

AlaricBalth's picture

You would be correct in stating that individual pensions (401K and IRA) cannot invest in those types of instruments. But I am referring to State, Municipal and Corporate (such as GM or Boeing) pensions. If you go back to your comments on July 13, you and I covered this issue before.


Large pensions such as CalPERS and New York City Retirement use Libor Swaps to hedge risk, usually interest rate risk, or to maximize returns. The Illinois State Teachers Pension took massive losses 2 years ago due to derivatives.

"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.

But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said."


Benjamin Glutton's picture

the rates were not always manipulated lower...


  • Lawsuit claims the Libor rate rose ‘artificially’ on the first day of the month – the days when many mortgage rates are calculated
  • Barclays, RBS, Lloyds and Bank of America all named in class-action lawsuit

A 65-year-old American woman who lost her home in the credit crunch is leading a class-action suit against 12 of the world’s major banks for their part in the financial crisis.

Annie Bell Adams claims banks including Barclays, RBS and Lloyds, manipulated the Libor rates to make mortgage repayments more expensive than they should have been.

The suit alleges the Libor – the rate at which banks lend to each other – was artificially changed at times when it would have a big impact on adjustable mortgage rates, ‘unjustly enriching’ the bankers at the cost of mortgage-holders losing their homes.

The class action lawsuit, originating in Alabama, alleges the rate-fixing meant homeowners paid thousands more than necessary between 2000 and 2009 – with the knock-on effect causing many families to lose their homes.
serog's picture

Agreed.  I had an ARM during this period and the rate kept going lower.  If I join this suit I'll probably get counter-sued and have to pay them the difference.

fonzannoon's picture

holy shit that was funny. It's a trap!

Stoploss's picture

For the past ten years anyone who bought property with or without an ARM did so in a FED funds rate environment of around 5%.

The majority of ARMS were sold between 04 and 07.

ARM's are tied to libor, not FFR.

Anyone remember what happened when libor was 7+% in late 07 - 08??  The ARM holders abandoned their properties, that's what happened. ARM's are designed to reset UP, not down. 

Then, all of a sudden, LIBOR, dropped to below 2% along with the FFR being brought down as well.

Now.. Who did that help?


The final result is what we have now, basically zero rates across the board. Who benefits from low rates?

What do low rates do to savers and job creators? Especially job creators?

So, the newest ARM recipients have benefitted the most from zero rates and low libor, not prime borrowers.

But no matter how low rates go, you can't pay for the privelage, unless you have a job.

Low rates kill job creation, but allow for lower payments due to reduced rates that kill job's to allow for lower payments due to reduced rates that kill job's to allow for lower payments due to reduced rates.................


Rarouk, where the fuck are you???

Seasmoke's picture

homeowners will get thousands, lawyers will get millions and banks will keep billions......

Peter Pan's picture


Beautifully said.

CPL's picture

What are they going to do?  Sue them because their homes flatlined and readjusted themselves to market value after the bubble burst and destroyed the economy?  The home owners are just as culpable as the banks, just as greedy and stupid.  The consumer drove the price up with property agents and they are going to cry hard now?  The banks gave them the rope to hang themselves with.


What a waste of time for both the US home owners association and their members.  Only ones getting rich in that situation are the lawyers, all they are doing is adding to total cost on a depreciated asset.


aka throwing good money after bad.  

waterhorse's picture

"The home owners are just as culpable as the banks, just as greedy and stupid."

Remind me again HOW the homeowners manipulated LIBOR, came up with derivative Ponzi schemes, created the MERS system, participated in robosigning fraud and committed REMIC fraud.