Skip to main content

FHFA Sends Letter to FHLBs With Warning on LIBOR Alternatives

WASHINGTON–The Federal Housing Finance Agency (FHFA) has sent a letter to the Federal Home Loan Banks cautioning that some of the alternatives being proposed for the soon-to-expire LIBOR may pose safety, soundness and reputational risks.

The letter from FHFA Deputy Director Andre D. Galeano to the presidents and CFOs of the FHLBs notes that in recent months “several organizations in the marketplace have announced or introduced other potential alternative reference rates that may be inconsistent with established principles for an acceptable reference rate.”

LIBOR, the London Interbank Offered Rate, is no longer to be offered for use with new contracts and will be phased out completely for existing contracts by June 2023.

Galeano wrote that FHLB use or adoption of the alterative rates “may significantly pose the same safety and soundness and reputational risks that befell LIBOR.”

SOFR Cited

Instead, stated Galeano, the alternative rate developed by the Federal Reserve, the Secured Overnight Financing Rate (SOFR), is “an appropriate and well-accepted replacement” for LIBOR. He pointed to the “alacrity” at which FHLB system has moved away from LIBOR to SOFR and also issued a warning.

“To this end, DBR (the FHFA Division of Bank Regulation) does not believe the (FHLB) System should experience recidivism in adopting and using alternative reference rates that have shortcomings similar to those of LIBOR and other recently discontinued or soon to be discontinued reference rates,” he wrote.

Comments

Popular posts from this blog

The Many Faces of Peace

By Grant Sheehan Embracing Peace: The Legacy of the Sheehan Family As I sit down to write this blog post, I am inspired by the deep-rooted values and meanings embedded in my family name, Sheehan. Originating from the Gaelic word "O'Síothcháin," which translates to "descendant of Síothcháin," my surname encapsulates a beautiful legacy of peace and tranquility. In a world often filled with conflict and noise, the concept of peace is more important than ever. This blog post is not only a reflection on my family's heritage but also a heartfelt exploration of what peace means in today’s context. The Sheehan family has long been a symbol of harmony, and it is my hope to delve into this rich meaning and examine how we can carry forward the ideals of serenity and understanding in our lives and communities. Join me as we explore the significance of peace, both personally and universally, and how this legacy can inspire us to cultivate a more compassion...

Tackling the Elephant in the Room - Transforming Board Education at your Credit Union

https://www.ncofcu.org/first-responder-credit-union-academy

NCUA - Letter to Federal Credit Unions (25-FCU-01) Federal Credit Union Operating Fee Schedule for 2025

    Letter to Federal Credit Unions (25-FCU-01) Federal Credit Union Operating Fee Schedule for 2025 Dear Boards of Directors and Chief Executive Officers: The NCUA Board unanimously approved the agency’s 2025 operating and capital budgets at its December 2024 meeting. As a result of that decision and other factors, federal credit union operating fees will decrease by an average of approximately 1.2 percent in 2025.  Additionally, the operating fee exemption threshold was increased from $2 million to $2.08 million. Federal credit unions with a four-quarter average of $2.08 million or less in total assets are ex...

SFDEFCU celebrates 75 years In business in 2025

The Syracuse Fire Department Employees Federal Credit Union (SFDEFCU) is celebrating its 75th anniversary in 2025. SFDEFCU, chartered on March 24th, 1950, is hosting a 75th Anniversary Celebration at the Marriott Syracuse Downtown on Saturday, March 29th. Tickets may be purchased by calling, visiting the Credit Union, or going to www.syrfirecu.com/75th-Anniversary-Celebration . Additional events include their Annual Meeting on Tuesday, May 13th, a Kids' Day for members under 12 on Saturday, June 21st, and Member Appreciation Week from August 11th, 2025 through August 15th, 2025; all at their Wilkinson Street location. The Annual Member Bake will be held on Friday, October 3rd at The Spinning Wheel A 75th Anniversary Committee of ten Credit Union members is assisting in planning the festivities. In February 2025, members can purchase SFDEFCU branded clothing from an online store, for details, visit https://sfdcu75.itemorder.com/shop/home/ . A small, in-branch store is selling 75th A...

Acting CFPB Director Bessent Halts $5 Overdraft Cap, Casting Doubt On Future Of CFPB Rules

  By Ray Birch WASHINGTON—Is the $5 cap on overdraft fees dead? Scott Bessent, Treasury Secretary and current acting director of the Consumer Financial Protection Bureau, has mandated a suspension of a wide range of activities at the agency. And among those activities halted is the imposing of the $5 OD cap for financial institutions over $10 billion in assets, POLITICO reported. In an email to agency staff on Monday, which was obtained by POLITICO, Bessent instructed CFPB personnel to cease all rulemaking activities and suspend the effective dates of any rules that had not yet taken effect. He further directed employees to stop all activities related to enforcement actions, litigation, and public communications. As CUToday.info  reported , the CFPB late last year issued a final rule on overdrafts analysts forecast will likely drive many financial institutions over $10 billion in assets to drop their OD charge to a miniscule $5, and then eventually force all other FI...