A US judge signaled he won’t immediately terminate Libor, rejecting an effort by a group of borrowers who argued the benchmark is the product of a “price-fixing cartel.”
The tentative ruling Thursday by US District Judge James Donato in San Francisco is a win for some of the world’s biggest banks, including JPMorgan Chase, Credit Suisse Group and Deutsche Bank. The banks argued abruptly ending the London interbank offered rate would wreak havoc on financial markets and undermine years of work reforming the reference rate.
The plaintiffs, which include 27 consumer borrowers and credit card users, argued Libor is an illegal price-fixing agreement. The lawsuit seeks to prohibit the benchmark, or set it at zero with borrowers repaying capital but not interest.
Donato said he wasn’t convinced the consumers’ request for an injunction halting the use of Libor met the legal test of urgency.
Read Also
- Skiing: American Mikaela Shiffrin wins Levi’s slalom, first race of the season Nov 19, 2022
- Teamfight Tactics Reckoning Will Remove Annoying Items | EarthGamer Jul 4, 2021
- Premier League: Manchester United owners considering club sale Nov 23, 2022
- Manuel Guzmán decides with a throw of three for the Titans May 30, 2022
- Shakhtar have established a record of UPL Jul 26, 2020
- Brazil vs Argentina: a historical embarrassment that stains football Sep 5, 2021
- Empoli is a phenomenal: his Primavera championship. Atalanta, no tris Jun 30, 2021
“It’s been 35 years that Libor’s been on the books,” Donato said. “Isn’t that enough in itself to show there’s no irreparable harm?”
But the judge also said the litigation isn’t over. “I’m not saying you don’t have an underlying case,” Donato told lawyers for the consumers. “That’s a different day.”
Libor is derived from a daily survey of bankers who estimate how much they would charge each other to borrow. It’s used to help determine the cost of borrowing around the world, from student loans and mortgages to interest rate swaps and collateralized loan obligations, and continues to underpin hundreds of trillions of dollars of financial assets around the world.
In the wake of the 2008 financial crisis, regulators discovered that lenders had been manipulating the rates to their advantage, resulting in billions of dollars of fines. For over three years, policy makers around the globe have been developing new benchmarks to replace Libor.
The case is McCarthy v. Intercontinental Exchange, 20-cv-05832, US District Court, Northern District of California (San Francisco).