ABA and CBA Letter to CFPB on the Proposed LIBOR Transition Rule

Comment Intake—LIBOR
Bureau of Consumer Financial Protection
1700 G Street NW
Washington DC 20552

To Whom It May Concern:

The American Bankers Association (ABA) and the Consumer Bankers Association (CBA) arepleased to submit their comments to the Bureau of Consumer Financial Protection (Bureau) onits proposed amendments to Regulation Z (Truth in Lending Act) to address the cessation of theLondon Inter-Bank Overnight Rate (LIBOR), which is expected to be discontinued afterDecember 31, 2021. To assist in the transition from LIBOR, the Bureau is proposing changes toopen-end and closed-end Regulation Z provisions to provide examples of replacement indicesfor LIBOR that meet certain standards of that regulation. In addition, the Bureau is proposing topermit creditors for home equity lines of credit (HELOCs) and credit card accounts to transitionexisting accounts that use a LIBOR index to a replacement index on or after March 15, 2021 ifcertain conditions are met.

ABA and CBA generally support the proposal and appreciate the Bureau’s initiative toprovide helpful clarification to Regulation Z in anticipation of LIBOR cessation and reduce someof the uncertainty and expected disruption. The proposed roadmap to choose a compliantreplacement index will be useful for compliance with Regulation Z and is also likely to be usedby courts and others in interpreting contracts that, for compliance and other reasons, mirrorregulatory text. We strongly urge the Bureau to finalize amendments quickly so that there issufficient opportunity for banks and other creditors to prepare for and proceed with the transition from LIBOR beginning on the March 15, 2021 date proposed by the Bureau. Inaddition, we recommend that the Bureau take the opportunity to identify additional indiceswhich might meet the Regulation Z standards and to provide a framework in the Commentaryfor analyzing other indices and an example of methodologies creditors may use to determinewhether a replacement index is substantially similar or comparable.