The Senate Banking and House Financial Services Committees heard from Prudential Regulators including Federal Reserve Vice Chairman Randal Quarles, FDIC Chairman Jelena McWilliams, Acting Comptroller of the Currency Brian Brooks and National Credit Union Administration Chairman Rodney Hood at hearings this week. Both chambers had questions regarding the impending cessation of the London Inter-bank Offered Rate (“LIBOR”) at the end of 2021. Specifically, Sen. Pat Toomey (R-PA), Ranking Member Patrick McHenry (R-NC) and Rep. Brad Sherman (D-CA) asked Vice Chair Quarles what will happen to legacy contracts after LIBOR’s expiration date. Vice Chairman Quarles said regulators need to consider a mechanism allowing legacy contracts to mature on an existing basis without having to negotiate a new rate, noting that the Fed has been discussing the issue with the Financial Stability Board (“FSB”) and will have a plan in a month or two but the ultimate transition will require a legislative element.

Click here to watch the Senate Banking Committee Hearing.

Click here to Watch the Housing Financial Services Committee Hearing.