Newsroom
CFPB, NCUA, more issue statement on discontinuation of LIBOR
The Consumer Financial Protection Bureau (CFPB) joined the NCUA and three other federal financial regulatory agencies today in issuing a statement highlighting the risks posed by the discontinuation of the London Interbank Offered Rate (LIBOR).
“Five federal financial institution regulatory agencies […] are jointly issuing this statement to emphasize the expectation that supervised institutions with LIBOR exposure continue to progress toward an orderly transition away from LIBOR,” the interagency statement noted. “Additionally, this statement includes clarification regarding new LIBOR contracts, considerations when assessing appropriateness of alternative reference rates, and expectations for fallback language.”
In addition, the NCUA issued a letter to credit unions to manage the LIBOR transition. The agency noted the following:
- The NCUA encourages all federally insured credit unions to transition away from using the U.S. dollar LIBOR settings as soon as possible, but no later than December 31, 2021.
- Failure to prepare for LIBOR disruptions could undermine a federally insured credit union’s financial stability, and safety and soundness.
- The Federal Financial Institutions Examination Council’s (FFIEC) July Joint Statement on Managing the LIBOR Transition stating that credit unions should manage the LIBOR transition carefully.
While the NCUA wants credit unions to make this transition by the end of the year, the CFPB indicated it still does not intend to finalize its rule facilitating this transition until January 2022.