NCUA Issues Additional Statement on LIBOR Transition

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As a follow-up to Letter to Credit Unions 21-CU-03, LIBOR Transition, the National Credit Union Administration (NCUA) issued an updated letter to credit unions that provides additional reminders related to LIBOR’s discontinuance.

The letter discusses an interagency statement issued by the NCUA, along with four other federal financial institution regulatory agencies and state bank and state credit union regulators, which emphasizes the expectation that supervised institutions with LIBOR exposure continue to progress toward an orderly transition away from LIBOR.  Additionally, the joint statement includes clarification regarding new LIBOR contracts, considerations when assessing appropriateness of alternative reference rates, and expectations for fallback language.

The NCUA encourages all federally insured credit unions to transition away from using U.S. dollar LIBOR as a reference rate as soon as possible, but no later than Dec. 31, 2021, and to ensure existing contracts have robust fallback language that includes a clearly defined alternative reference rate.

Read the joint statement on managing the LIBOR transition here.

Please contact your NCUA Regional Office or state supervisory authority if you have any questions about this important topic.

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