By an overwhelming bipartisan vote of 415-9 today, the House passed H.R. 4616, the Adjustable Interest Rate (Libor) Act, an American Bankers Association-advocated bill that would address “tough legacy” contracts that currently reference Libor, which will cease to be published by June 2023.
The legislation would provide a solution for these tough legacy contracts that lack sufficient fallback language and cannot be amended, the groups wrote. It also offers uniform treatment for all U.S. contracts that fall under federal legislation, creates a safe harbor from litigation “and prevents otherwise inevitable litigation costs and gridlock.”
ABA President and CEO Rob Nichols applauded the passage of the bill and urged the Senate to pass it quickly. “Without federal legislation to address these contracts, investors, consumers, and issuers of securities may face years of uncertainty and unexpected economic losses from Libor’s cessation,” Nichols said. “ABA joins with consumer groups, investors, financial regulators and industry participants in supporting this important step towards smoothing the transition from Libor and preventing disruption and harm to America’s economy and financial markets.”
