Financial regulators issued a joint statement highlighting the risks of transitioning from LIBOR. The Federal Financial Institutions Examination Council encouraged institutions to continue the switch to alternative reference rates to mitigate financial, legal, operational, and consumer protection risks.
The statement also highlights the risks associated with inadequate fallback language that fails to account for LIBOR’s discontinuance. It identifies areas where supervisory staff will focus their reviews of LIBOR transition planning and risk mitigation.
ICBA serves on the Alternative Reference Committee implementing the transition away from LIBOR and encourages community banks to prepare for the transition.