U.S. Swiss, British and Canadian investigators are looking into whether large banks profited by manipulating a key international interest rate, documents show.
The London Interbank Offered Rate is one measure of borrowing costs among banks but also affects rates for home loans, credit cards and student loans. It functions as a benchmark for more than $350 trillion in loans worldwide, CNN reported Sunday.
The U.S. Justice Department notified a federal judge last week it is carrying out a criminal investigation of alleged Libor manipulation. Citing disclosure in banks' public filings, CNN said investigators in Switzerland, Canada and the United Kingdom are also taking a look at possible Libor manipulation.
When Libor rates rise, commercial and individual consumers generally get hit with higher rates as well. When Libor rates fall lenders become less willing to lend because of lower returns.
Rosa Abrantes-Metz -- a professor at New York University's Stern School of Business and a former economist with the U.S. Federal Trade Commission -- told CNN even a slight change in Libor rates "can cause massive redistribution of resources because it's so extensively used."
Bank of America, Citigroup, HSBC, JPMorgan and Credit Suisse are defendants in a U.S. civil suit in which investors claim Libor rate distortion dating back to 2006 has cut into profits on investments.
There was no comment from law enforcement officials or officials of the banks named in the lawsuit, CNN said.