Skip to main content

NCUA Joins With Other Agencies in Statement on LIBOR

WASHINGTON– NCUA has joined with four other federal financial regulatory agencies and state credit union regulators in issuing a statement that the use of United States Dollar LIBOR (USD LIBOR) panels will end on June 30, 2023. 

“The statement reiterates the agencies’ expectations that financial institutions with USD LIBOR exposure should complete their transition of remaining LIBOR contracts as soon as practicable. Accordingly, the (agencies are) urging banks and nonbanks alike to continue their efforts to adequately prepare for the sunset of USD LIBOR,” the agencies said in releasing the statement.

LIBOR

The statement notes that the financial services industry uses USD LIBOR as a reference interest rate for many consumer financial products, including adjustable rate mortgage loans, reverse mortgages, home equity lines of credit, credit cards, and student loans. 

“The approaching discontinuation of USD LIBOR in June 2023 presents numerous consumer protection, financial, litigation, and operational risks,” the statement notes. “For instance, if financial institutions do not issue required disclosures, consumers may not know when the transition from USD LIBOR will occur or how the interest rates they pay will be calculated.”
The agencies, which include the CFPB, said they are committed to helping both banks and nonbanks transition affected consumers from USD LIBOR in a transparent and orderly manner.

NCUA Publishes Letter

NCUA noted additional guidance on LIBOR Transition Plans can be found in the May 2021 Letter to Credit Unions 21-CU-03, LIBOR Transition.

For its part, the CFPB noted that in October 2019 and December 2021, the CFPB published blog posts discussing the transition away from USD LIBOR to help consumers understand this market-wide change. In June 2020, the CFPB released an updated Consumer Handbook on Adjustable-Rate Mortgages to help consumers better understand these products and how their payments can change over time.

Additional Reminders

In addition, on Dec. 7, 2021, the CFPB reminded it finalized a rule revising Regulation Z (Truth in Lending Act) to facilitate the transition away from the USD LIBOR interest rate index for consumer loans. The rule establishes requirements for how creditors must select replacement indices for existing USD LIBOR-linked consumer loans after April 1, 2022. 

The CFPB also said it is currently assessing any further steps it needs to take as a result of the subsequent Adjustable Interest Rate Act and the Federal Reserve Board’s implementing regulation identifying benchmark rates based on the Secured Overnight Financing Rate (SOFR) to replace USD LIBOR in certain consumer contracts.

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Let the Truth be Told - Why a New NCUA Rule Could Jolt Credit Union Innovation

The National Credit Union Administration has finalized a rule to improve board and executive succession planning within the credit union industry. This strategic move aims to curb the trend of mergers driven by technological stagnation and poor succession strategies, ensuring more credit unions maintain their independence and enhance their technological capabilities. By Ken McCarthy, Manager of marketing communications at Tyfone Credit unions are merging out of existence because of an inability to invest in technology, the National Credit Union Administration Board wrote when introducing its now finalized rule on board succession planning. The regulator now requires credit unions to establish succession planning for critical positions in their organizations. But it’s likely to have even wider effects, such as preserving more independent charters and shaking up the perspectives of those on credit union boards. “Voluntary mergers can be used to create economies of scale to offer more or ...
Post a Comment
Read Complete Article HERE>»

Armand Parvazi MBA CUDE - Last Friday marked his last day with New Orleans Firemen’s Federal Credit Union.

It’s been an incredible journey, but it’s bittersweet to announce that Friday marked my last day with New Orleans Firemen’s Federal Credit Union. We've accomplished so much together in my six years as Chief Administrative and Development Officer. Some of the highlights: Implemented a data-driven marketing strategy that delivers over 1,800% annual ROI. Developed automated triggers to ensure members receive the right offers at the right time. Grew assets by 61% and increased products per new member from 1.88 to 2.62. Converted online banking to enhance the member experience. Introduced a loan origination system for faster and more efficient loan processing. Transitioned to a mobile-first financial institution to meet members where they are. Pioneered the first Cancer Care loan pause program in the nation (in collaboration with Andy Janning ) Secured nearly $17 million in grants for our impactful work. Expanded our field of membership to 35 parishes and counties and added numerous fi...
Post a Comment
Read Complete Article HERE>»

Biggest Social Security Changes for 2025

  Chris Gash Facebook Twitter LinkedIn Monthly payments are going up, and drop-in service at SSA offices is largely going away The  cost-of-living adjustment  (COLA) may be the most widely anticipated way Social Security changes from year to year, but it’s far from the only one. Inflation, wage trends and new policies directly affect not just the more than 68 million people receiving Social Security benefits but also the estimated 184 million workers (and future beneficiaries) paying into the system.  Here are seven important ways Social Security will be different in 2025. 1. Cost-of-living adjustment Inflation continued to cool this year , resulting in a  2.5 percent COLA  for 2025 for people receiving Social Security payments, down from  3.2 percent in 2024 . The estimated average retirement benefit will increase by $49 a month, from $1,927 to $1,976, starting in January, according to the Social Security Administration (SSA). It’s the lowest COLA i...
Post a Comment
Read Complete Article HERE>»