FHFA Directs FHLBs to End Dependence on Libor

With the future of the London Interbank Offered Rate uncertain beyond 2021, the Federal Housing Finance Agency today directed the Federal Home Loan Banks to begin planning to phase out Libor-based transactions. However, the phase-out does not apply to collateral from member institutions accepted by the FHLBs.

In a letter today, FHFA told the FHLBs that effective March 31, 2020, they should no longer enter into new financial assets, liabilities or derivatives referencing Libor and maturing after Dec. 31, 2021, for all product types except investments. For investments, FHFA directed FHLBs to stop purchasing by Dec. 31, 2019 any investments tied to Libor and maturing after Dec. 21, 2021.

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