VIEWpoint Issue 1 | 2023
2023 Compliance Trends: Staying Ahead in an Evolving Regulatory E...
2023 Tax Calendar
On Oct. 20, 2021, the National Credit Union Administration (NCUA), as well as the five financial institution regulatory agencies, and bank and state credit union regulators, issued an Interagency Joint Statement on Managing the LIBOR Transition (Joint Statement). NCUA issued the statement in the form of a Letter to Credit Unions, as a follow-up to Credit Unions 21-CU-03.
The Joint Statement states entering into new contracts, including derivatives, that use LIBOR as a reference rate after Dec. 31, 2021, would create safety and soundness risks, including litigation, operational and consumer protection risks. Contracts entered into on or before Dec. 31, 2021, should either use a reference rate other than LIBOR or have fallback language that provides for use of a strong and clearly defined alternative reference rate after LIBOR’s discontinuation. Going forward, supervised institutions are encouraged to include fallback language in new or updated contracts that provides for using a strong and clearly defined fallback rate when the initial reference rate is discontinued.
Financial institutions should develop and implement a transition plan for communicating with consumers, clients and counterparties, and ensure systems and operational capabilities will be ready for transition to a replacement reference rate after LIBOR’s discontinuation.
To learn more about how the LIBOR transition will impact your institution, contact Doeren Mayhew’s regulatory compliance specialists.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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