The Federal Reserve Board, CFPB, FDIC, NCUA, OCC and state bank and credit union regulators (“the agencies”) issued a joint statement on October 20, 2021, on managing the LIBOR transition beyond 2021. The statement “emphasize[s] the expectation that supervised institutions with LIBOR exposure continue to progress toward an orderly transition away from LIBOR.” The agencies warn that entering into new contracts using LIBOR as a reference rate after 2021 “would create safety and soundness risks, including litigation, operational, and consumer protection risks” and warns of increased scrutiny as a result.
The statement advises that institutions preparing for the LIBOR transition must fully assess alternative reference rates, including their suitability for the institution’s “products, risk profile, risk management capabilities, customer and funding needs, and operational capabilities.” The statement also encourages institutions to ensure adequate fallback language for alternative reference rates is included in LIBOR-based contracts.
As a reminder, DocMagic will be transitioning our existing LIBOR plans and documents at the end of 2021, though they will still be available to select.
