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Is FDIC Negligent or Fleecing Americans in the

LIBOR Scandal
PRESS RELEASE - USA - DEC 1, 2014 16:02 UTC

FDIC is suing the Panel Banks for rigging the LIBOR rates while it benefits from
partnerships with banks who enforced and continue to enforce the LIBOR index, the same
index which FDIC said is illegal.
by Val Sklarov of
BoutiqueBankLaw.com
Is FDIC Negligent or Fleecing Americans in the LIBOR
Scandal

Is FDIC suppose to protect

the American public or
fleece us ?
VAL SKLAROV

As the LIBOR scandal continues to heat up and new facts are uncovered, it appears to some
that FDIC is becoming as much a victim as the perpetrator of deception and is benefiting from
it.
About 4 to 5 years ago the real estate crisis was just beginning to develop and banks started
to fail prompting FDIC to take over many of the failed banks. The failed banks had huge real
estate mortgage portfolios tied to LIBOR index and the FDIC needed to figure out what to do
with them. They figured out quite a scheme. The FDIC proceeded to dispose of the assets of
the failed banks to successor banks and entered in to an agreement with these new banks
called Shared Loss Agreement. This agreement allows FDIC to benefit financially on any
recovery of assets managed and sold of by the successor banks.
So the successor banks managed performing loans while foreclosing on non-performing
loans. Most if not all mortgages have a default provision in them much like the credit cards
that if the borrower fails to perform under the terms of the loan, then the lender has a right to
invoke a much higher interest rate as punishment. The default rate is always the same index
as the loan. So if your loan rate is the LIBOR index, then the default rate is also tied to LIBOR
plus an extra 4% to 8% added as the penalty.
Over the next several years the successor banks have filed thousands of foreclosure cases
against borrowers who had LIBOR based mortgages, obtained judgments against these
borrowers using the default rate and shared recovery proceeds with the FDIC. Nothing seems
abnormal about this scenario and the general public probably is thinking that its a good thing
because FDIC needs to recover billions of dollars when it bailed out the failed banks as any
financial recovery is in the publics best interest.

Everything on the surface seemed fine until March of 2014 when FDIC decided to file a huge
lawsuit on behalf of the failed banks against The Panel Banks alleging that the LIBOR rate was
manipulated and rigged, similar to insider trading and caused collapse of some 50 banks
across the country. The FDIC in its suit is claiming that The Panel Banks were conspiring to
manipulate and rig the LIBOR rate for a very long time and that The Panel Banks knew of this
or should have known as early as 2008 when news first started to break.
Herein is the problem that FDIC is now facing. On one hand, it's suing The Panel Banks for
rigging the LIBOR rate but on the other hand, it's benefiting from its Shared Loss Agreements
with successor banks who are obtaining judgments against foreclosed borrowers still using
the LIBOR rate. The Shared Loss Agreements between FDIC and successor banks state that
the successor banks will follow all laws. What clearly FDIC failed to do is to instruct the
successor banks to rewrite the mortgages indexing them to LIBOR and instead to index them
to prime, fix rate, treasuries or whatever. The FDIC has in its authority and ability to instruct
the successor banks but instead did nothing. The FDIC also has in its authority to instruct all
the banks nationwide to allow the banks borrowers to rewrite the mortgage and to index the
interest rate to any other index. If FDIC knew of this scandal for years, why has it done nothing
and continues to do nothing in its obligation to serve the publics interest.
So who's interests does the FDIC represent as it sits idle and watches its Shared Loss
Agreements reap in billions while its suing The Panel Banks trying to collect billions more but
the American borrower gets fleeced by the agency that is supposed to serve the public.
Double standard, negligence or incompetence? Maybe once FDIC collects billions from its law
suit against The Panel Banks, all LIBOR borrowers nationwide will choose between an
invitation to FDIC headquarters for free lunch or the tour of The White House plus some
cheese and crackers.
Categories:

Tags:

Finance, Business, Real Estate

FDIC Panel Banks, FDIC Suit, LIBOR, LIBOR Fraud,

LIBOR Manipulation, LIBOR Scandal, Panel Banks

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Original Source: www.i-newswire.com