At Wednesday’s Senate Banking Committee Hearing, Federal Reserve Chairman Jerome Powell told Senators that the Federal Reserve would be open to the idea of exploring a separate alternative reference rate that would be credit sensitive as the financial services industry prepares to transition away from LIBOR in 2021. The new rate comes as some banks are concerned that SOFR could be a mismatch between bank assets and liabilities in times of economic stress. Despite this, Chairman Powell noted that LIBOR transition is still happening. “We’re open to that, but it doesn’t mean that this the transition away from LIBOR to SOFR will stop. It has to go forward.”

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