The Libor scandal has taken a fresh twist after it emerged US mortgage lending giants Fannie Mae and Freddie Mac lost around $3 billion (£1.8 billion) through the manipulation of Libor.
The news comes shortly after UBS was fined by $1.5 billion by US, UK and Swiss regulators for the role it played in rigging the bank lending rate.
The development could have major implications for the housing market, especially if the authorities opt to launch legal action against banks.
State-owned Fannie and Freddie control about 50% of the US mortgage market and the federal regulator said it is considering whether it should take legal action. The $3 billion loss is an initial estimate and the Federal Housing Finance Agency (FHFA) is awaiting for clarification on the scale of the loss before deciding on its next step.
A spokesperson for the FHFA told the Chicago Tribune. 'We conducted a preliminary analysis of potential Libor-related losses at Fannie and Freddie and shared that with FHFA, recommending that they conduct a thorough review of the issue. FHFA agreed to study the matter further.
'We continue to evaluate issues associated with Libor and monitor Libor-related developments, recognising that other Federal agencies are also involved in related matters. '