The Federal Home Loan Mortgage Corporation (FHLMC), or Freddie Mac as it is popularly known, has filed a lawsuit against 15 of the the world's largest banking groups, in a bid to recover some of the losses it incurred as a direct result of manipulation in benchmark LIBOR rates by these banks.

Banks like Bank of America ( BAC ), JPMorgan Chase ( JPM ), UBS ( UBS ), Citigroup ( C ), RBS ( RBS ) and Credit Suisse (CS) among others are already facing lawsuits in the wake of the LIBOR scandal. This lawsuit by the mortgage giant is the first major government-backed lawsuit against them, and will most likely open the floodgates to more such lawsuits from retail and institutional investors in the near future. Freddie Mac's sister-concern Fannie Mae (FNMA) is also "weighing the possibility" of a similar lawsuit.

Freddie Mac has also named the British Bankers' Association (BBA) as a responsible party in the lawsuit - alleging that the organization was complacent in its role of setting LIBOR rates.

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The London Interbank Offered Rate (LIBOR), is arguably the most important benchmark rate used around the globe to fix interest rates for everything, ranging from loans and mortgages to complex rate-based derivative contracts. But since the U.S. and U.K. regulatory bodies fined Barclays $451 million last June over alleged manipulation of LIBOR by its employees, all other banks involved in the speculation came under scrutiny by financial authorities from several countries. UBS and RBS have also settled with authorities for $1.5 billion and $621 million respectively.

With the manipulation in LIBOR rates affecting a wide spectrum of individual and corporates either directly or indirectly, involved banks face an increasing number of lawsuits for their alleged involvement in the LIBOR rigging. Freddie Mac's lawsuit against the banks is not completely unexpected, considering that last December, the Federal Housing Finance Agency (FHFA) estimated total losses of no less than $3 billion from the LIBOR manipulation for Freddie Mac and Fannie Mae.

This lawsuit is likely to have a similar effect like the one after FHFA filed a series of lawsuits against 17 major banking institutions in late 2011 over their mortgage mis-selling practices. ((Barclays, BofA Sued by FHFA Over Mortgage-Backed Securities, Bloomberg, Sep 2 2011)) These lawsuits triggered a number of others that alleged the same charges, and the banks are ensued in these legal battles till date. The banks have to cope with not only several litigation charges that these lawsuits come with, but also millions which they could end up paying as settlements.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.