3.23.21
Structured Finance Association: ‘Clear Consensus’ on Need For Federal Legislation to Ease LIBOR Transition
The Structured Finance Association (SFA) today released the following statement on testimony delivered by U.S. Treasury Secretary Janet Yellen at a House Committee on Financial Services hearing in which Yellen said federal legislation is needed to ease the transition away from the London Inter-Bank Offered Rate (LIBOR).
“There is a clear consensus that federal legislation is necessary to ensure stability through the transition away from LIBOR,” said Michael Bright, CEO of the Structured Finance Association. “We were glad to hear Secretary Yellen echo Federal Reserve Chairman Powell’s view that Congress will need to act to provide a smooth transition, and we will continue to work with policymakers on a solution.”
During the hearing, U.S. Representative Brad Sherman (D-Cali.), a senior member of the committee, referenced testimony last month from Federal Reserve Chairman Jerome Powell in which he said federal legislation is “the best answer” to ease the transition away from LIBOR.
Sherman asked: “Would you agree with Chairman Powell that Congress will need to act to provide for a smooth transition for these $2 trillion in contracts?”
“Yes, I would agree,” responded Yellen. “There are certain legacy contracts where the transition could be difficult without legislation. These are contracts that don’t provide for a workable fallback rate, so I think Congress does need to provide legislation for the LIBOR transition.”
Video of the exchange is available here.
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