Insights / articlesInsights
Insights / articles

Attorney Published Article

Federal Agencies Issue Statement on LIBOR Transition

Read Time: 1 min

On November 30, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the agencies) issued a Statement encouraging banks to transition away from U.S. dollar (USD) LIBOR as soon as practicable. The agencies stated that failure to prepare for disruptions to LIBOR, including operating with insufficiently robust fallback language, could undermine financial stability and banks’ safety and soundness. The agencies advised that any new contracts entered into before December 31, 2021, should either utilize an alternative reference rate other than LIBOR or provide robust fallback language that identifies an alternative reference rate after LIBOR’S discontinuation.

The LIBOR transition is a significant transition event for a number of banks, lenders, and other financial services providers as many products and services are tied to LIBOR as a reference rate. The agencies’ joint statement continues a trend of agency statements on the LIBOR transition and appropriate alternative reference rates as we approach the planned discontinuation of the one week and two month USD LIBOR settings on December 31, 2021, and the remaining USD LIBOR settings on June 30, 2023.  This statement closely follows the agencies’ November 6, 2020 statement reiterating that they are not endorsing a specific replacement reference rate.  These two statements suggest that the agencies wish to create a sense of urgency about the LIBOR transition while still providing banks some flexibility in how to execute that transition.

Reprinted with permission from the American Bar Association’s Business Law Today December Month-In-Brief: Business Regulation & Regulated Industries.

Insights

Attorney Published Article

FRB Proposes LIBOR Regulation

August 30, 2022

On July 28, 2022, the Board of Governors of the Federal Reserve System published a proposed regulation to implement the Adjustable Interest Rate Act. Due to problems with LIBOR no longer being representative of the underlying borrowing costs of banks that LIBOR was intended to reflect, LIBOR is scheduled to be discontinued on June 30, 2023.

Alert

LIBOR Act provides answers, safe harbor for lenders

March 22, 2022

Signed into law on March 15, 2022, the Adjustable Interest Rate (LIBOR) Act of the Consolidated Appropriations Act of 2022 resolves a pending concern with variable interest rate loan contracts that use LIBOR as their index.

Attorney Published Article

Federal Reserve Board Updates FAQs for Several Regulations

January 31, 2022

On December 30, 2021, the Federal Reserve Board (Fed) published updates to its FAQs for Regulations H, O, W, and Y, as well as FAQs related to covered savings associations. These FAQs are staff interpretations and have not been approved by the Board.

Attorney Published Article

Transitioning away from Libor

August 21, 2020

Libor, the London Interbank Offered Rate at which leading London banks borrowed from each other on a short term, unsecured basis, is being “phased out” and may not be available after 2021. Libor has long been used in the United States for rate-setting, so the phase-out has implications for all manner of transactions and forMore

Presentation

The Death of LIBOR and its impact on adjustable rate lending

April 13, 2018

Member Arthur Rotatori (Cleveland) moderated a Roundtable titled “The Death of LIBOR and its impact on adjustable rate lending” during the CFSC Roundtable Program at the ABA’s Consumer Financial Services Committee Business Law Section Spring 2018 Meeting in Orlando, Florida on Friday, April 13. Due to the real problems of being a (mostly) theoretical rate,More