Fannie Mae sues Wall St banks over Libor

Fannie Mae is staying on the offensive against Wall Street. The government-backed firm filed a lawsuit Thursday against nine major banks over their alleged manipulation of Libor, a key interest-rate benchmark. The suit comes less than a week after a settlement in which JPMorgan (JPM, Fortune 500) agreed to pay Fannie and its sister company, Freddie Mac, $4 billion to settle allegations that it misrepresented mortgage securities sold to the firms. Fannie says the banks' alleged manipulation of Libor caused it approximately $800 million in losses. Four banks -- Barclays, UBS, Royal Bank of Scotland and Rabobank -- have already reached settlements with the Justice Department and other regulators on the issue, paying more than $3.6 billion in fines. A handful of brokers and traders have also been charged individually, with more cases expected. Libor rates are created through a process overseen by the British Bankers' Association, an industry group, in which a group of large banks are polled on their borrowing costs in various currencies over various time periods. Their responses are then averaged to produce rates that are used as benchmarks for trillions of dollars' worth of derivatives and other financial products, including car loans and adjustable-rate mortgages. In the four settlements reached so far, the banks have admitted that traders engineered fraudulent Libor submissions to benefit their derivatives positions. The firms also admitted to lowballing their Libor quotes around the time of the financial crisis to appear stronger and more creditworthy. The other banks named in the Fannie Mae lawsuit are Deutsche Bank (DB), Credit Suisse (CS), Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and JPMorgan.