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While it is unclear whether many small banks will do so, the legal action is further evidence that the scandal is reverberating well beyond the confines of Wall Street and the City of London. Big banks are already facing an array of Libor-related lawsuits by some big investors and local governments, such as the city of Baltimore.
Tompkins, whose class-action firm has handled securities, antitrust and consumer lawsuits, said U.S. community banks might have lost more than $1 billion over four years on loans to small businesses at artificially low rates.
The alleged manipulation hurt small banks that operate on thin profit margins and rely more on interest income than large banks with diverse trading operations, he said.
The lawsuit accuses the banks of violating the mob-busting U.S. Racketeer Influenced and Corrupt Organizations Act by rigging rates.
The bank defendants declined to comment. They have said in court papers seeking dismissal of other Libor lawsuits that plaintiffs have failed to show how banks acted to restrict competition, even if rates were misstated.
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