CONTACT: Barbara Hagenbaugh
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bhagenbaugh@fsforum.com
Bill would address “tough legacy” contracts affected by transition from LIBOR
Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement todayfollowing House passage of H.R. 4616, the “Adjustable Interest Rate (LIBOR) Act,” to address “tough legacy” contracts that reference LIBOR:
“The Financial Services Forum welcomes passage of the measure, which would effectively address the challenge of amending ‘tough legacy’ contracts that reference LIBOR rates. It is essential that Congress move quickly to address these contracts, which under current regulations cannot be easily modified to reflect the transition away from LIBOR. We applaud House members for passing this important legislation and encourage the U.S. Senate to act swiftly to bring much-needed certainty during this important transition.”
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Background
The London Interbank Offer Rate, or LIBOR, is a reference rate that is the benchmark interest rate at which banks lend to each other. LIBOR is being phased out as a reference rate and will cease to be published entirely in June 2023.
Because of the sheer number of financial contracts that are pegged to LIBOR, existing contracts need to be adjusted well before LIBOR rates are no longer published. But certain contracts are difficult to amend, and federal legislation is needed swiftly to reduce uncertainty and disruption and to ensure continued market liquidity.
For more information, please read letters sent to House and Senate leaders by the Financial Services Forum and other trade organizations.
The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, financial inclusion, a competitive global marketplace, and a sound financial system.
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