A legislator in San Francisco is seeking a review of possible losses to the city from banks' alleged manipulation of a benchmark that determines the price at which banks lend to one another.

John Avalos, a member of the Board of Supervisors, called Tuesday for a hearing to examine losses from investments by the city that tied to the London interbank offered rate.

"We know the banks colluded to rig interest rates resulting in significant losses to taxpayers across the nation," Avalos said in a press release. "We owe it to our city residents to find out how much this type of bank fraud cost San Francisco."

Avalos' allegation comes amid a series of lawsuits in California and elsewhere in which municipalities claim that their investments suffered as a result of banks colluding to keep the Libor artificially high or low.

In January, San Mateo County joined with the County of San Diego, the City of Richmond and other public entities in the state to sue 20 financial institutions that have helped to set the Libor. The suit, which was filed in the U.S. District Court in San Francisco, contends the municipalities received lower payments on interest rate swaps, corporate bonds and other investments as a result of the alleged rigging.

The action mirrors a lawsuit filed by Baltimore's mayor and city council in August 2011 in the U.S. District Court in Manhattan that charges eight banks with engineering of the Libor the city says cost it hundreds of millions of dollars in connection with interest rate swaps. The lawsuit is among roughly 21 class actions in the New York court that accuse banks of understating their borrowing costs and misleading investors.

An aide to Avalos said that officials in San Francisco could decide to join a pending lawsuit or file its own suits. "We're sort of using our power of inquiry to have this hearing and have the various financial arms of the city report on what the impact is here," Jeremy Pollock, an aide to Avalos, told American Banker.

The hearing is expected to take place in February or March, Pollock added.

Regulators in the U.S., U.K. and elsewhere also are probing whether banks conspired to finesse the Libor over a roughly two-year period starting in 2007. The Royal Bank of Scotland (RBS) is said to be nearing a settlement with regulators over the bank's role in the Libor-setting, the Wall Street Journal reported. Tuesday. UBS and Barclays (BCS) agreed to pay a combined $2 billion last year to settle similar probes.

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