Browsing: Reference rates

Commercial Lending

As banks prepare to make the transition away from the London Interbank Offer Rate as a benchmark interest rate, the Financial Accounting Standards Board today approved staff proposals to provide relief from onerous accounting processes that would normally be required when contracts are modified.

Policy

In the clearest terms expressed by any regulator to date, Federal Reserve Vice Chairman for Supervision Randal Quarles emphasized that banks need to begin transitioning away from the London Interbank Offered Rate as a benchmark.

Commercial Lending

The Alternative Reference Rates Committee today issued “A User’s Guide to SOFR,” a handbook to help market participants understand the Secured Overnight Financing Rate, its preferred alternative to the London Interbank Offered Rate, and how it can be used in cash products.

Commercial Lending

Regulatory agencies will expect banks to conduct thorough due diligence on the reference rates they use, but the Secured Overnight Financing Rate recommended as a replacement for the London Interbank Offered Rate has already undergone that due diligence, Federal Reserve Vice Chairman for Supervision Randal Quarles said at a public event today on the transition from Libor.

ABA Banking Journal Podcast

With the London Interbank Offered Rate — which underpins more than $350 trillion in mortgages, commercial loans, bonds and derivatives worldwide, including $200 trillion in U.S. dollar-denominated financial instruments — not guaranteed to be sustained after 2021, what should banks be doing now to prepare for a transition away from the widely used benchmark?

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