Berkshire Bank, a lender with 11 branches based in New York and New Jersey, has charged in a proposed lawsuit that the bank’s interest income was affected by manipulation of the London interbank offered rate.
The lawsuit alleges that Libor manipulation enabled consumers to pay less for loans and that “tens, if not hundreds, of billions of dollars” of all loans originating in New York were affected by Libor manipulation, The Wall Street Journal reports.
Additionally, the lawsuit takes aim at the 16 bank panel that established the dollar Libor between August 2007 and May 2010.
Legal experts said that the lawsuit by Berkshire Bank could be the first of similar lawsuits to follow.
“Libor could well be the asbestos claims of this century,” James Cox, a law professor at Duke University, said, adding that manipulation of Libor has “ginormous” consequences, according to The Wall Street Journal.
Last month, Barclays agreed to pay $453 million to U.S. and British authorities in a settlement in which the bank admitted to attempting to manipulate Libor. More than 12 banks are currently under investigation by international regulatory authorities.
Berkshire’s suit also charges that banks breached New York state common fraud laws, which could make institutions liable for damages if it is discovered that they purposely manipulated Libor, The Wall Street Journal reports.
The British Bankers’ Association reports that about $10 trillion of loans and swaps with a value of $350 trillion are linked to Libor.
“These are very tricky claims,” Cox said, according to The Wall Street Journal. “They’re going to be very hard to litigate.”