12.9.21
Structured Finance Association Applauds House Passage of LIBOR Legislation
The Structured Finance Association (SFA) today applauded House passage of H.R. 4616, the Adjustable Interest Rate (LIBOR) Act of 2021. The legislation passed the House by a vote of 415 to 9 and now heads to the Senate for consideration.
“The cessation of LIBOR has been an enormous challenge overhanging the capital markets since 2017,” said Michael Bright, CEO of the Structured Finance Association. “With roughly $16 trillion of contracts with no realistic means to be renegotiated or amended – including mortgages, student loans, and business loans – millions of American households are at risk. We applaud the House of Representatives for taking this important step and are grateful for the leadership of Representatives Sherman, Huizenga, Waters, and McHenry. As made clear during last month’s Senate Banking Committee hearing on LIBOR, there is strong consensus on the need for congressional action, and we appreciate Senators Tester, Tillis, Brown, and Toomey for their focus on this critical issue. The Senate must now act swiftly to enact this legislation and help transition our markets and economy away from LIBOR once and for all.”
Last month, Bright testified before the Senate Banking Committee, telling Congress the roughly $16 trillion in “tough legacy” contracts that have no realistic means to be renegotiated and amended prior to the cessation of LIBOR “impact a broad range of American households and communities” and pose a “serious risk to the financial system” absent legislative action. SFA has been a leading voice in the massive effort to smoothly transition away from LIBOR and was joined by other leading financial services industry groups in announcing support for House-passed legislation in July.
Bright, who earlier this year penned an op-ed in the Financial Times calling for federal legislation to “end this saga once and for all,” told the committee last month: “After lengthy deliberation and debate, a consensus position across the entire market has emerged that a federal safe harbor for the transition of these tough legacy contracts is the only option to avoid costly litigation and consumer and investor disruption. The many other alternatives examined were simply inoperable. We now see that, absent federal legislation, retirees and savers who hold trillions of dollars of impacted bonds will be forced to absorb tens of billions of dollars in legal costs.”
Yesterday, SFA joined 21 other financial services trade associations in calling for enactment of the legislation. Text of the letter is available here.