City Officials Accuse Big Banks Of Interest Rate Rigging

By Steve Tawa

PHILADELPHIA (CBS) - The City of Philadelphia is joining other municipalities in filing lawsuits against a number of the world's largest name-brand banks for financial losses in an alleged interest-rate rigging scandal.

Interest-rate swaps are a tool used by big cities, like Philadelphia, to manage their debt, and the city seeks damages for what it calls "naked price-fixing."

City lawyer Dan Cantu-Hertzler says the city has retained three outside law firms to go after Wall Street's biggest banks.

"This is not the usual just failure to disclose. There was actual manipulation of the rates, apparently, by 10-12 international banks," he said. "And they are all defendants."

Detailed in 115-court pages, the city names Bank of America, Citigroup, JP Morgan, Barclays, Credit Suisse and others.

City Treasurer Nancy Winkler says the losses for the city range between $31-36-million and between $12-14-million for the Pennsylvania Intergovernmental Cooperation Agency, or PICA, which oversees the city's finances. City officials did not have figures on how the School District was affected.

The complaint alleges the misconduct happened from at least 2007 through 2010, when budgets were already being strained by the financial crisis.