NEW YORK (CNNMoney) -- A small New York-based bank has filed a class action suit against 16 of the world's largest banks, charging that it was hurt by their alleged manipulation of the Libor interest rate.
The Berkshire Bank, which has 11 branches in New York and New Jersey and assets of only $881 million, says that it and other lenders and investors were hurt because Libor was manipulated too low by the major banks.
Libor, short for the London Interbank Offered Rate, is used as the benchmark to set the rates paid on an estimated $10 trillion in outstanding loans worldwide, including adjustable-rate mortgages, credit card rates and other small business and consumer loans.
While many customers might have benefited from the Libor scandal because they paid less on their loans, the suit charges that the small banks were hurt because the alleged manipulation caused them to receive lower interest payments, cutting into their revenue.
British banking giant Barclays (manipulated Libor rates lower in 2008 and 2009. It agreed to pay $453 million in penalties to U.S. and U.K. regulators under terms of the settlement. Numerous state attorneys general are weighing seeking civil penalties against the Libor-setting banks for their alleged misconduct.) has already admitted that its employees regularly and deliberately
Suspicion has now fallen on the other major banks that help to set Libor. Many of them -- including Deutsche Bank (Fortune 500), UBS ( ) and JPMorgan Chase ( , Fortune 500) -- have disclosed that they are being investigated. All those banks are included in The Berkshire Bank lawsuit, as is Bank of America ( , Fortune 500), which also helps to set the rates.), Royal Bank of Scotland ( ), Credit Suisse ( ), Citigroup ( ,
Spokespeople for Barclays as well as the three U.S. banks named in the suit - JPMorgan Chase, Citi and BoA, declined to comment on the suit, as did Steven Rosenberg, the CEO of The Berkshire Bank's holding company, Berkshire Bancorp ().
Hannah Luise Buxbaum, the interim dean of the law school at Indiana University, said the lawsuit does pose a threat to the major banks.
"The real threat here is not that it's one David vs. Goliath, it's that the court certifies a class action and every small bank out there is joined," she said.
She said that because U.S. law allows for damages to be tripled if defendants are found to violated anti-trust laws, "given the volume of loans based on Libor, that would be not payable. I think the end game for the plaintiffs has to be some form of settlement."
But Buxbaum said the plaintiffs in the case will still have an uphill battle before they get any damages, despite the Barclays settlement and the investigations now taking place. That's because some Supreme Court cases suggest that civil cases such as this one can be dismissed if the misconduct took place outside of the United States, as might have been the case in this instance.
"That's the way [the big] banks are going to try to get out from under these suits, arguing that the American laws can't apply to action overseas, even if it did affect U.S rates," she said.
The suit was filed July 25 in U.S. District Court in New York.
The Berkshire Bank is not affiliated with a similarly named bank based in Pittsfield, Mass., or with Warren Buffett's holding company, Berkshire Hathaway (Fortune 500).,
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.98%||4.26%|
|15 yr fixed||3.03%||3.15%|
|30 yr refi||4.09%||4.34%|
|15 yr refi||3.13%||3.22%|
Today's featured rates: