Rep. McHenry Presses Fed for More Guidance on Libor Transition

House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) wrote to Federal Reserve Vice Chairman for Supervision Randal Quarles this week calling on the Fed to increase its efforts to help banks transition away from the London Interbank Offered Rate to SOFR, the preferred benchmark rate of the Alternative Reference Rates Committee.

Expressing concern that the transition away from Libor will have for a large number of legacy contracts, McHenry urged the agency to provide financial institutions with “appropriate input and guidance” to help them prepare for the transition. In addition, he asked the Fed to report an estimated number of borrowers that will be required to renegotiate loan terms as a result, and to explore the possible legal ramifications. Finally, McHenry called for an analysis of the disruption that borrowers and financial institutions may experience during the move from Libor to SOFR.