Learn

The London interbank offered rate, or LIBOR, has been called the world’s most important number. Quoted daily across five currencies and seven maturities, the rate underpins hundreds of trillions of dollars in contracts around the world from home mortgage loans to complex derivatives. For U.S. dollar (USD) LIBOR alone, the estimated exposure is approximately $200 trillion. 

The Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have issued supervisory guidance  encouraging banks to “cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021,” noting that new USD LIBOR issuance after 2021 would create safety and soundness risks.

CREFC serves as a member of the Alternative Reference Rates Committee (ARRC), a group of private-market participants convened by the Federal Reserve Board and Federal Reserve Bank of New York. In addition, CREFC co-chairs the ARRC’s Securitizations Working Group (SWG) with the Structured Finance Association (SFA). We are focused on helping the CRE finance industry learn about the transition from LIBOR and serving as a platform to create a constructive dialogue on the challenges our industry faces during this critical period of change. 
 
For any questions or if you would like to be involved in a CREFC working group on the LIBOR transition, please feel free to reach out to Raj AidasaniLisa Pendergast or Sairah Burki.

Latest News

News

2022 Omnibus Signed into Law; Includes LIBOR Fix

March 14, 2022

On March 11, President Joe Biden signed an omnibus spending package for the 2022 fiscal year after a frenzied stretch of negotiations. While the macro components of the legislation include aid to Ukraine and $1.5 trillion to fund the government through September 30, an important component is the inclusion of a long-awaited legislative fix for financial contracts that do not consider LIBOR’s permanent cessation and have no workable fallbacks (so-called “tough legacy” contracts). The LIBOR bill will minimize the risk of litigation and adverse economic impacts associated with the transition and provide greater certainty to investors, businesses, and consumers.

Bill Addresses Trillions of Dollars of Tough Legacy LIBOR Contracts

There are currently trillions of dollars of outstanding contracts, securities, and loans that use LIBOR for their interest rates but do not have the appropriate contractual fallback language to facilitate the transition away from LIBOR. With all remaining U.S. dollar LIBOR tenors slated to cease publication in June 2023, federal legislation is critical to address these “tough legacy” contracts.

Without this fix, investors, servicers, and issuers of securities may have faced years of uncertainty, litigation, and changes in valuation, creating ambiguity that would lead to a reduction in liquidity and an increase in volatility. The bill also creates a safe harbor from litigation for parties that are covered by the legislation and prevents otherwise inevitable litigation costs and gridlock.

The LIBOR legislation was introduced in the Senate on March 2 by Senators Jon Tester (D-MT), Thom Tillis (R-NC), Senate Banking Committee Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA). The week prior, CREFC and 22 other financial trade associations submitted a letter to Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) strongly endorsing the legislation. The bill also had the endorsement of Fed Chair Powell, who referred to it as an important part of the transition. The House passed similar “tough legacy” legislation in late 2021 in a bill sponsored by Rep. Brad Sherman (D-CA-30).

Please reach out to Raj Aidasani with any questions.

Contact 

Raj Aidasani
Senior Director, Research
646.884.7566
raidasani@crefc.org
Bill Addresses Trillions of Dollars of Tough Legacy LIBOR Contracts
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
2022 Omnibus Signed into Law; Includes LIBOR Fix
March 14, 2022
On March 11, President Joe Biden signed an omnibus spending package for the 2022 fiscal year after a frenzied stretch of negotiations. While the macro components of the legislation include aid to Ukraine and $1.5 trillion to fund the government throu

News

2022 Omnibus Headed to the President; Includes LIBOR Fix

March 11, 2022

As a follow-up to our previous Alert, late yesterday, an omnibus spending package for the 2022 fiscal year cleared the Senate after a frenzied stretch of negotiations and is headed to the President. While the macro components of the legislation include aid to Ukraine and $1.5 trillion to fund the government through September 30, an important component is the inclusion of a long-awaited legislative fix for financial contracts that do not consider LIBOR’s permanent cessation and have no workable fallbacks (so-called “tough legacy” contracts).

The LIBOR bill will minimize the risk of litigation and adverse economic impacts associated with the transition and provide greater certainty to investors, businesses, and consumers.

Bill Addresses Trillions of Dollars of Tough Legacy LIBOR Contracts
There are currently trillions of dollars of outstanding contracts, securities, and loans that use LIBOR for their interest rates but do not have the appropriate contractual fallback language to facilitate the transition away from LIBOR. With all remaining US dollar LIBOR tenors slated to cease publication in June 2023, federal legislation is critical today to address these “tough legacy” contracts.

Without this fix, investors, servicers, and issuers of securities may have faced years of uncertainty, litigation, and changes in valuation, creating ambiguity that would lead to a reduction in liquidity and an increase in volatility. The bill also creates a safe harbor from litigation for parties that are covered by the legislation and prevents otherwise inevitable litigation costs and gridlock.

introduced in the Senate on March 2 by Senators Jon Tester (D-MT), Thom Tillis (R-NC), and Senate Banking Committee Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA). The week prior, CREFC and 22 other financial trade associations submitted a letter to Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) strongly endorsing the legislation. The bill also had the endorsement of Fed Chair Powell, who referred to it as an important part of the transition. The House passed similar “tough legacy” legislation in late 2021 in a bill sponsored by Rep. Brad Sherman (D-CA-30).

Please reach out to Raj Aidasani with any question

Contact

Raj Aidasani
Senior Director, Research
646.884.7566
raidasani@crefc.org
The LIBOR bill will minimize the risk of litigation and adverse economic impacts associated with the transition and provide greater certainty to investors, businesses, and consumers.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
2022 Omnibus Headed to the President; Includes LIBOR Fix
March 11, 2022
As a follow-up to our previous Alert, late yesterday, an omnibus spending package for the 2022 fiscal year cleared the Senate after a frenzied stretch of negotiations and is headed to the President. While the macro components of the legislation inclu

News

LIBOR Bill Introduced in Senate; Could Pass This Month

March 7, 2022

Bipartisan legislation was introduced in the Senate last week to help effect a fair transition for financial contracts which do not consider the permanent cessation of LIBOR and have no workable fallbacks (so-called “tough legacy” contracts). The bill will minimize the risk of litigation and adverse economic impacts associated with the transition and provide greater certainty to investors, businesses, and consumers.

The legislation could pass the Senate as early as this month as part of the omnibus appropriations bill that is working its way through Congress. CREFC and 22 other financial trade associations wrote Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) to endorse the legislation.

Fed Chair Powell said that the legislation is important and that the transition is down to the “hard tail.” The bill was introduced by Senators Jon Tester (D-MT), Thom Tillis (R-NC), and Senate Banking Committee Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA).

The House passed similar ‘tough legacy LIBOR’ legislation in late 2021 in a bill sponsored by Rep. Brad Sherman (D-CA-30).

Contact

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
The legislation could pass the Senate as early as this month as part of the omnibus appropriations bill that is working its way through Congress.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2022 CRE Finance Council. All rights reserved.
LIBOR Bill Introduced in Senate; Could Pass This Month
March 7, 2022
Bipartisan legislation was introduced in the Senate last week to help effect a fair transition for financial contracts which do not consider the permanent cessation of LIBOR and have no workable fallbacks (so-called “tough legacy” contracts). The bil

Become a Member

CREFC offers industry participants an unparalleled ability to connect, participate, advocate and learn!
Apply Now

Sign Up for eNews