The House passed ICBA-supported legislation to support the transition from LIBOR to alternative reference rates.
Bill: The Adjustable Interest Rate (LIBOR) Act of 2021 (H.R. 4616)—which passed 415-9—would address existing contracts that reference LIBOR but don’t have a replacement benchmark rate if LIBOR is discontinued. Introduced by Rep. Brad Sherman (D-Calif.), the bill would provide such a replacement benchmark rate selected by the Federal Reserve Board.
ICBA Advocacy: ICBA and 21 other organizations this week urged the House to pass the measure to avoid a reduction in liquidity and an increase in volatility due to “tough legacy” contracts.
Next Steps: ICBA has urged the Senate Banking Committee to consider the bill and will continue working with Senate offices to advance the measure in that chamber.
Background: No new financial contracts may reference LIBOR as the relevant index after the end of 2021. Starting in June 2023, LIBOR can no longer be used for existing financial contracts.
More: An ICBA blog post details the end of LIBOR and the impact of the pending transition on community banks.