Mortgage finance giants Fannie Mae and Freddie Mac may have lost up to $3 billion from the manipulation by several big banks of the global interest rate known as Libor, the Washington Post reported today. The manipulation likely caused Fannie and Freddie to lose billions of dollars on their holdings of more than $1 trillion in interest-rate swaps, floating-rate bonds, mortgage-backed securities and other assets linked to Libor from September 2008 to 2010, according to a memo from the inspector general for the Federal Housing Finance Agency, the regulator that oversees Fannie and Freddie. The inspector general recommended that FHFA conduct a thorough review and consider suing the banks involved in the scheme.
