CFPB issues interim final rule for Libor transition

The CFPB issued an interim final rule today updating its Libor transition rule from 2021. The new rule makes changes consistent with the Adjustable Interest Rate Act, or Libor Act, enacted in March of last year. The changes include conforming the terminology used to identify the replacement indices and adding an example of a 12-month Libor tenor replacement index that meets standards in the Truth in Lending Act.

Friday’s interim final rule does not modify the CFPB’s 2021 Libor transition rule related to the prime rate as a replacement index. According to the CFPB, the updated rule will “further facilitate the orderly transition of those consumer loans that currently use the Libor index to other indices” prior to the planned sunset of Libor on June 30. The interim final rule is effective May 15 and comments are due on or before 30 days after publication in the Federal Register.