Skip to main content

SEC Calls for Orderly Transition Away From LIBOR

Phil Hall
Jul 15, 2019
Photo credit: Getty Images/ablokhin

The U.S. Securities and Exchange Commission (SEC) has called on market participants to “proactively manage their transition” away from the London Interbank Offered Rate (LIBOR), which is set to expire in 2021.
 
The SEC noted that the discontinuation of LIBOR could present a material risk for public companies, investment advisers, investment companies, and broker-dealers. The risk could metastasize if an orderly transition to an alternative reference rate is not completed in a timely manner, the SEC added. 
 
“The SEC will continue to monitor disclosure and risk management efforts related to the LIBOR transition, and we welcome engagement from market participants on these important matters,” said SEC Chairman Jay Clayton.
 
Last week, the Alternative Reference Rates Committee (ARRC), a group of private-market participants convened by the Federal Reserve Board and the New York Fed, issued a report highlighting the potential of the Secured Overnight Financing Rate (SOFR) to replace LIBOR, which is used as the base rate for adjustable-rate commercial and multifamily mortgages totaling more than $1 trillion. The ARRC developed what it calls a “Paced Transition Plan” to facilitate the switchover, along with recommendations to encourage the financial services industry’s adoption of SOFR, which the ARRC first proposed in 2017.
 
In June, the Mortgage Bankers Association’s (MBA) LIBOR Outreach Committee found 92 percent of the commercial and multifamily mortgage lenders it polled have already begun planning for the transition away from LIBOR, with 77 percent already including adjusted LIBOR fallback language in all new loan documents. But only 56 percent of respondents polled by the MBA said they were on track in preparing for a future without LIBOR and only 41 percent said they might use SOFR as the replacement for LIBOR.

 
Published
Jul 15, 2019
CFPB Names 4 To Key Senior Positions

The appointees include two who helped create the bureau and two who served on the CFPB staff during the Obama administration.

Regulation and Compliance
Oct 14, 2021
FHFA Raises Enterprises' Multifamily Loan Purchase Caps

The Federal Housing Finance Agency (FHFA) said the 2022 multifamily loan purchase caps will be $78 billion for each Enterprise, for a combined total of $156 billion to support the multifamily market.

Regulation and Compliance
Oct 13, 2021
CFPB Hits AAG With Complaint For Deceptive Marketing Of Reverse Mortgages

The Consumer Financial Protection Bureau filed a complaint and proposed consent order, which alleges that American Advisors Group (AAG) used inflated and deceptive home estimates to attract reverse mortgage consumers.

Regulation and Compliance
Oct 12, 2021
Waterstone Mortgage Names VP Of Compliance

Waterstone Mortgage Corporation named Kris Barros as the company's vice president of compliance.

Community
Oct 08, 2021
Battling The ‘Giant Purple Snorklewacker’

The confirmation of Rohit Chopra as CFPB director has the mortgage industry anxious, but former MBA CEO David Stevens offers some advice: follow the rules.

Regulation and Compliance
Oct 08, 2021
The Compliance Contradiction

Staunch compliance stances often lead to contradictory actions.

Regulation and Compliance
Oct 06, 2021