Trickle of Libor lawsuits from rate-fixing scandal likely to become deluge

By Danielle Douglas

Lawsuits are mounting against some of the world’s biggest banks over the ma­nipu­la­tion of the global interest rate known as Libor as smaller lenders, municipalities and investors take stock of losses tied to the widening scandal. The cases are believed to be a trickle before an oncoming deluge of civil litigation that will beset the world’s largest banks for years. Yet the ultimate problem for the accused may not be the millions they pay in damages but rather the cloud of uncertainty looming over their business. Already there is talk of the government stepping in to oversee a global settlement, just as it did in the mortgage robo-signing scandal. But it took years for regulators to reach a nationwide mortgage settlement. And that settlement involved the cooperation only of states, not countries, which means the banking industry could be mired in legal action for a while.  “There will be a waterfall of derivative lawsuits,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics, a Washington research firm. “Each will be different because the alleged harm by plaintiffs is different — different investments, different time periods, different outcomes.”