Bank of America and JPMorgan, accused of manipulating interest rates on loans for over 30 years
JPMorgan Chase, Bank of America, Wells Fargo and other major US financial institutions are facing a new class action lawsuit accusing them of conspiring to fix prime lending rates in the United States for more than three decades, leading millions of consumers and small businesses to pay higher borrowing costs.
Bank of America, accused of manipulating interest rates on loans for over 30 years
The lawsuit, initiated Thursday in a federal court in Connecticut, claims that eight large banks have coordinated since 1994 to set lending rates at the same level as an indicator published by The Wall Street Journal, known as the “WSJ Prime Rate” – set exactly 3 percentage points above the federal funds rate. This indicator serves as a benchmark for trillions of dollars worth of credit, including credit cards and mortgage lines.
The two plaintiffs, who are seeking class-action status to represent hundreds of thousands of borrowers across the country, say they paid artificially high interest rates on loans indexed to the WSJ Prime Rate. About 70 percent of consumer loans under $1 million are tied to that index, according to the complaint.
“This alleged conspiracy affects millions of Americans trying to buy a home or access financing for a small business“, said lawyer Patrick McGahan, representing the plaintiffs.
JPMorgan, Bank of America, Wells Fargo, Citibank and US Bank declined to comment or did not respond to requests from Reuters.
The Wall Street Journal and its owner, Dow Jones, are not targeted by the lawsuit.
The complaint claims that, until 1992, the newspaper published a range of “prime” interest rates – the lowest and highest rate offered by the big banks – a fact that stimulated competition. Currently, the WSJ Prime Rate is a single number resulting from the average of the rates of a group of banks.
The plaintiffs accuse the banks that, although they publicly claimed that they independently set the interest rate “raw“depending on various economic factors, in reality”the interest rates reported are the result of an agreement to artificially fix interest rates”.
Analysis of data over the past few decades shows near-perfect alignment among the big banks, which, according to the complaint, makes “impossible” that they acted independently.
