NYDFS Gets $600K In Deutsche Bank Libor Rigging Fine
Deutsche Bank on Thursday became the latest big bank to settle with the NYDFS. The NYDFS accused the Deutsche Bank contributed to rigging Libor interest rates. The London Interbank Offered Rate, the interest rate of choice for trillions of dollars in municipal bonds, mortgages, student loans and other debt.
To settle the case, the Deutsche Bank agreed to pay a record $2.5 billion in penalties that have already stung Barclays and UBS. Deutsche Bank, Germany’s largest financial institution and a problem child in the eyes of regulators has also agreed to accept a criminal guilty plea for the British subsidiary at the center of the case. It is the most significant banking unit to accept a criminal plea in the Libor rigging investigation.
According to the New York Department of Financial Services, New York taxpayers will be getting $600,000 of it. Benjamin Lawsky put out a press release yesterday with a copy of the agreement between the NYDFS and Deutsche Bank.
The NYDFS took on the monolithic German Bank last month. The NDFS investigation marks the first Libor investigation by the state of New York. Deutsche Bank is currently negotiating a settlement with the U.S. Justice Department.
Lawsky’s department regulates banks with charters in New York as well as foreign banks with branches in the state. Last year, Lawsky and his team at the NYDFS forced Ocwen to fire their founder, William Erbey as CEO and pay the state of New York roughly $150 million in penalties for backdating acceleration letters to New York homeowners who were behind on their payments.
Lawsky was also responsible for convincing another mortgage servicer, Nationstar that it was not in their best interests to jerk around New York homeowners.
The Libor rate or the London Interbank Offered Rate has been the benchmark rate for sub-prime residential mortgages as well as municipal bonds and its manipulation by the major banks has been known for some time as Royal Bank of Scotland and the Union Bank of Switzerland have admitted their involvement and paid fines to both the British and U.S. governments.
Manipulation of the Libor rate is also the main cause of the municipal bankruptcies of Montgomery County, Alabama and the City of Detroit.