log in
All Articles | Back

Member Articles


LIBOR Administrator Announces Wind-down Dates for Publication of LIBOR Index Data; Federal Bank Regulators Announce that Banks Should Cease Using LIBOR in New Contracts by December 31, 2021 

by Michael C. Flynn

Published: December, 2020

Submission: December, 2020

 



ICE Benchmark Administration, the British-based LIBOR administrator, announced that it intends to cease the publication of the one-week and two month U.S. Dollar LIBOR settings immediately after December 31, 2021, and the other U.S. Dollar LIBOR settings immediately after June 20, 2023.


Accordingly, on November 30, the U.S. Federal banking regulators (the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) issued a Statement on LIBOR Transition (Statement) which provides that:


• Banks’ failure to prepare for disruptions to U.S. Dollar LIBOR, including operating with insufficiently robust fallback language, could undermine financial stability and banks’ safety and soundness.


• Therefore, banks entering into contracts using U.S. Dollar LIBOR as a reference rate after December 31, 2021, will have such practices evaluated as a safety and soundness risk in examinations.


• New contracts entered into before December 31, 2021 should use a non-LIBOR reference rate or have robust fallback language, including a clearly defined alternative reference rate after LIBOR’s discontinuation.


• The regulators recognize that use of LIBOR may be appropriate after December 31, 2021 in very limited circumstances, such as market making and hedging related to transactions entered into before January 1, 2022.


A copy of the Federal banking regulators’ Statement can be found here:


https://www.fdic.gov/news/press-releases/2020/pr20129a.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery


Buchalter Commercial Finance attorneys work extensively on LIBOR-related issues in transactions for virtually every type of financial institution clients.  The attorneys in the Commercial Finance Group represent the most dominant institutions in the commercial finance market. The firm has practiced in the commercial finance area since its inception in 1933. Through this representation, we participate in and shape the most sophisticated and novel transactions in the market.


Buchalter has one of the largest practices in the West Coast devoted exclusively to commercial finance transactions, which is well known and widely respected by its clients, peers and market observers. Our attorneys have won numerous awards and honors for their practice, and is the only regional law firm among the national and international firms to be ranked by Chambers and Partners as a leading law firm in the California bank and finance market, able to provide value on complicated financing transactions.


 



Link to article

 

MEMBER COMMENTS

 

 

WSG Member: Please login to add your comment.

    Disclaimer

WSG's members are independent firms and are not affiliated in the joint practice of professional services. Each member exercises its own individual judgments on all client matters.

HOME | SITE MAP | GLANCE | PRIVACY POLICY | DISCLAIMER |  © World Services Group, 2021