Fed Chief Backs Congressional Fix On Legacy Libor Contracts

Law360 (February 24, 2021, 7:48 PM EST) — Federal Reserve Chairman Jerome Powell told a House banking panel on Wednesday that the central bank does now believe that federal legislation will be needed to help facilitate the financial industry’s transition away from the London Interbank Offered Rate for so-called tough legacy contracts.

During questioning from lawmakers, Powell endorsed the concept of a federal legislative solution to address financial contracts that reference Libor but lack adequate provisions accounting for the possibility of the pricing benchmark’s demise, which is expected to occur by mid-2023 for the most-used U.S. dollar Libor tenors.

“Many Libor contracts are going to run off before then,”…