With two tenors of U.S. dollar Libor no longer being published the remainder set to cease by June 30, 2023, four senators this week introduced a bill that would address “tough legacy” contracts that reference Libor but cannot be easily changed.
The Economic Continuity and Stability Act—introduced by Sens. Jon Tester (D-Mont.), Thom Tillis (R-N.C.), Sherrod Brown (D-Ohio) and Pat Toomey (R-Pa.)—would direct the Federal Reserve to determine replacement rates for Libor-referencing contracts that lack fallback language and to provide a safe harbor from litigation over a change in rates after the cessation of Libor.
A companion bill in the House, H.R. 4616, passed by an overwhelming bipartisan vote of 415-9 in December. The American Bankers Association and several other trade groups urged the Senate to advance the Libor bill quickly. “Industry participants, including consumer groups, investors, banks, and issuers have all expressed the need for uniform federal legislation and urged swift congressional action,” they wrote.