The National Association of Federally-Insured Credit Unions (NAFCU) reached out to the Federal Reserve Board in support of the Adjustable Interest Rate (LIBOR Act).
In a letter to the Board, NAFCU’s Regulatory Affairs Counsel James Akin said the LIBOR Act would provide clear guidance and a consistent federal standard for contracts with interest rates transitioning away from the London Interbank Offered Rate (LIBOR) index for financial products. However, Akin did caution the Board to be aware of the impacts that complex or costly regulations would have on credit unions.
“NAFCU supports the Board’s decision to use SOFR-based benchmark replacement rates and appreciate the continuity of contract and litigation safe-harbor that this proposed regulation provides. NAFCU asks that the Board work to reduce costs and complexity associated with implementation of these regulations and minimize any mismatch between the Board-selected replacement rates,” Akin wrote to Federal Reserve Board Secretary Ann Misback.
Akin also asked the Fed to consider a range of alternative rates to accommodate credit unions that need the safe harbor granted by the LIBOR Act and want to protect themselves against asset-liability mismatches.
“Despite these concerns, NAFCU appreciates the proposed regulation’s provision of continuity of contracts and litigation related safe harbor protections in connection with the selection or use of the applicable Board-selected benchmark replacement,” he added.
NAFCU will continue to monitor the rulemaking process and issue a final regulation summary when the rule is finalized.