Adjustable Interest Rate (LIBOR) Act of 2021

4/17/2024, 11:45 PM

Adjustable Interest Rate (LIBOR) Act of 2021

This bill provides for the transition of certain financial contracts away from the London Interbank Offered Rate (LIBOR), a reference interest rate based upon the lending terms certain banks offer to each other for various lengths of time. LIBOR is set to be retired in 2023. Various financial contracts reference LIBOR as a benchmark for prevailing interest rates and use LIBOR in calculating certain payments or obligations.

In the event a contract referencing LIBOR does not have a fallback or replacement rate provision in effect when LIBOR is retired, or a replacement rate is not selected by a determining person as defined by the bill, the bill provides for a transition to a replacement rate selected by the Board of Governors of the Federal Reserve System. The bill also provides for conforming changes to these contracts, the continuity and enforceability of these contracts, and protections against liability as a result of such a transition.

Bill 117 HR 4616, also known as the Adjustable Interest Rate (LIBOR) Act of 2021, is a piece of legislation introduced in the US Congress. The purpose of this bill is to address the impending discontinuation of the London Interbank Offered Rate (LIBOR) as a benchmark interest rate.

The bill aims to provide a framework for financial institutions to transition away from using LIBOR as a reference rate for adjustable-rate mortgages, student loans, and other financial products. It establishes a process for identifying alternative reference rates and ensures that consumers are protected during this transition period.

Additionally, the bill includes provisions to prevent disruptions in the financial markets and to promote transparency and fairness in the transition away from LIBOR. It also requires federal agencies to coordinate with each other and with state regulators to ensure a smooth transition for consumers and financial institutions. Overall, the Adjustable Interest Rate (LIBOR) Act of 2021 seeks to address the challenges posed by the discontinuation of LIBOR and to provide a clear and orderly transition to alternative reference rates. It aims to protect consumers and ensure the stability of the financial system during this period of change.
Congress
117

Number
HR - 4616

Introduced on
2021-07-22

# Amendments
0

Sponsors
+5

Variations and Revisions

12/9/2021

Status of Legislation

Bill Introduced
Introduced to House
Passed in House
Introduced to Senate
Senate to Vote

Purpose and Summary

Adjustable Interest Rate (LIBOR) Act of 2021

This bill provides for the transition of certain financial contracts away from the London Interbank Offered Rate (LIBOR), a reference interest rate based upon the lending terms certain banks offer to each other for various lengths of time. LIBOR is set to be retired in 2023. Various financial contracts reference LIBOR as a benchmark for prevailing interest rates and use LIBOR in calculating certain payments or obligations.

In the event a contract referencing LIBOR does not have a fallback or replacement rate provision in effect when LIBOR is retired, or a replacement rate is not selected by a determining person as defined by the bill, the bill provides for a transition to a replacement rate selected by the Board of Governors of the Federal Reserve System. The bill also provides for conforming changes to these contracts, the continuity and enforceability of these contracts, and protections against liability as a result of such a transition.

Bill 117 HR 4616, also known as the Adjustable Interest Rate (LIBOR) Act of 2021, is a piece of legislation introduced in the US Congress. The purpose of this bill is to address the impending discontinuation of the London Interbank Offered Rate (LIBOR) as a benchmark interest rate.

The bill aims to provide a framework for financial institutions to transition away from using LIBOR as a reference rate for adjustable-rate mortgages, student loans, and other financial products. It establishes a process for identifying alternative reference rates and ensures that consumers are protected during this transition period.

Additionally, the bill includes provisions to prevent disruptions in the financial markets and to promote transparency and fairness in the transition away from LIBOR. It also requires federal agencies to coordinate with each other and with state regulators to ensure a smooth transition for consumers and financial institutions. Overall, the Adjustable Interest Rate (LIBOR) Act of 2021 seeks to address the challenges posed by the discontinuation of LIBOR and to provide a clear and orderly transition to alternative reference rates. It aims to protect consumers and ensure the stability of the financial system during this period of change.
Alternative Names
Official Title as IntroducedTo deem certain references to LIBOR as referring to a replacement benchmark rate upon the occurrence of certain events affecting LIBOR, and for other purposes.

Policy Areas
Finance and Financial Sector

Potential Impact
Bank accounts, deposits, capital•
Banking and financial institutions regulation•
Civil actions and liability•
Consumer credit•
Contracts and agency•
Credit and credit markets•
Debt collection•
Government lending and loan guarantees•
Higher education•
Interest, dividends, interest rates•
Student aid and college costs•
Tax administration and collection, taxpayers

Comments

Recent Activity

Latest Summary1/28/2022

Adjustable Interest Rate (LIBOR) Act of 2021

This bill provides for the transition of certain financial contracts away from the London Interbank Offered Rate (LIBOR), a reference interest rate based upon the lending terms...


Latest Action3/3/2022
Committee on Banking, Housing, and Urban Affairs. Hearings held.