Background:

In a letter to leaders of the House Financial Services Committee, SFA was joined by 17 other leading financial services industry groups in announcing support for the Adjustable Interest Rate (LIBOR) Act of 2021 (H.R. 4616). The Bill, proposed by Congressman Brad Sherman, was introduced during a House Financial Services Committee Markup and passed on July 28. The legislation will now head to a House floor vote before heading to the Senate.

Key Takeaways:

• SFA points out while states like New York and Alabama have already passed legislation to help address LIBOR cessation with respect to legacy contracts, a state-by-state approach does not provide the necessary comprehensive protections that is achievable at the federal level.
• SFA supports the bill in its aim to address “tough legacy” contracts that currently reference LIBOR and do not contain sufficient fallback language.
• The bill limits the scope of legislation so there is no interference with any contracts that have agreed fallback provisions or that can readily be amended by the contracting parties;
• The bill creates a safe harbor from litigation for parties that are covered by the federal legislation and prevents otherwise inevitable litigation costs and tedious gridlock.