by Erin Franey
San Francisco – Standing in front of a JPMorgan Chase bank branch on Tuesday afternoon, San Francisco Supervisor John Avalos announced he was launching an investigation into San Francisco’s potential losses from the LIBOR interest rate fraud scandal and to explore options to recoup that money as other cities and counties have recently done. He was joined by ReFund California, a coalition of community, labor and students concerned about the impact of the banks’ fraud on cities, counties, school and transit districts, colleges and the state itself, which have lost tens of millions of dollars as a result of banks’ illegal and unethical actions.
“We know the banks colluded to rig interest rates, resulting in significant losses to taxpayers across the nation,” said Supervisor Avalos. “We owe it to all of our current and future retirees as well as our city residents to find out how much this type of bank fraud cost San Francisco. I encourage every municipality in the country to review their books to make sure they recover any losses they suffered because of the banks’ illegal manipulation.”
Sixteen of the world’s largest banks, including JPMorgan Chase, Citigroup and Bank of America, have been accused of illegally manipulating the London InterBank Offered Rate (LIBOR) for their own gain – at the expense of municipalities, public pension funds and other investors. There is a global investigation underway and Barclays and UBS have paid nearly $2 billion in fines in connection with this scandal already. A unit of UBS also pleaded guilty to criminal charges.
Several cities, states, pension funds and public agencies have filed lawsuits seeking damages for their losses. Globally, up to $800 trillion of loans, securities and derivatives are linked to LIBOR.
“We know the banks colluded to rig interest rates, resulting in significant losses to taxpayers across the nation,” said Supervisor Avalos.
Specifically, Supervisor Avalos put in an official request for a public hearing at the Budget and Finance Committee to investigate the impact of LIBOR fraud on San Francisco. This will include a thorough review of the losses and the City’s options to recoup those losses. This is the first step in a broader process to determine the City’s course of action to protect taxpayers from the biggest financial fraud in history.
“The big banks caused the economic crisis, and now the same banks are illegally stealing our money,” said Nealie Yarborough, a leader with ACCE. “We shouldn’t cut any more services or programs until we get back the money the banks stole from us.”
Erin Franey can be reached at email@example.com.