The American Bankers Association and a coalition of trade groups today urged congressional leaders to pass H.R. 4616, the Adjustable Interest Rate (Libor) Act. The legislation addresses “tough legacy” contracts that currently reference Libor, which will cease to be published by June 2023.
The American Bankers Association and a coalition of trade groups today—in response to an advanced notice of proposed rulemaking by the Department of Housing and Urban Development—asked the Federal Housing Administration to issue a clear roadmap for servicers of FHA-insured adjustable-rate mortgages as the agency transitions from Libor to alternative reference rates.
As required by state laws passed in New York and Alabama, the Alternative Reference Rates Committee published a statement today selecting and recommending forms of the Secured Overnight Financing Rate—its preferred alternative to Libor—along with associated spread adjustments and conforming changes, to replace references to 1-week and 2-month U.S. dollar Libor in certain contracts affected by the state laws.
Refinitiv, the Alternate Reference Committee’s chosen provider to publish fallback rates for cash products based on the Secured Overnight Financing Rate, today announced that its USD IBOR Institutional Cash Fallbacks are now available for immediate use as production benchmarks.
With certain tenors of Libor set to sunset at the end of 2021, the Commodity Futures Trading Commission has issued a request for information on potential ways to amend its swap clearing requirement to address the transition away from Libor to alternative reference rates.
With several tenors of Libor scheduled to sunset at the end of the year and the remainder in June 2023, the American Bankers Association and a group of financial trade organizations urged lawmakers to advance legislation to address “tough legacy” contracts—those that do not have appropriate contractual fallback language to facilitate the transition to an alternative reference rate.
With several tenors of Libor scheduled to sunset at year-end, Acting Comptroller of the Currency Michael Hsu today emphasized that regulators will not allow “new Libor exposures—zombie or otherwise—after Dec. 31, 2021, and we mean it.” Hsu was referring to the belief by some that some form of Libor will survive after that date as “synthetic Libor” or “zombie Libor.”
The majority of financial services firms, 79%, have some internal Libor transition plan in place, according to a new survey from Bloomberg and the Professional Risk Managers’ International Association.
In a joint statement today, the federal and state banking regulators emphasized that supervised institutions are expected to continue to transition away from Libor ahead of the scheduled Dec. 31, 2021 sunset of several Libor tenors.
As banks prepare for the forthcoming cessation of Libor, the OCC today released an updated self-assessment tool for banks to evaluate their preparedness for transitioning away from Libor to an alternate reference rate, such as the Secured Overnight Financing Rate.