On April 28, 2023, the CFPB issued an interim final rule amending the agency’s 2021 LIBOR transition rule. The interim final rule contains updates to reflect the subsequent enactment of the Adjustable Interest Rate (LIBOR) Act and issuance of an implementing regulation by the Board of Governors of the Federal Reserve Board System. This interim final rule will further facilitate the orderly transition of those consumer loans that currently use the LIBOR index to other indices in anticipation of the planned cessation U.S. Dollar (USD) LIBOR after June 30, 2023.
In March 2022, Congress enacted the LIBOR Act which identified a replacement index based on the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The Federal Reserve Board issued a final rule to implement the LIBOR Act which took effect on February 27, 2023. The CFPB’s interim final rule amends and updates the Facilitating the LIBOR Transition final rule. Specifically, the CFPB is now conforming Regulation Z with the LIBOR Act and the Federal Reserve Board’s implementing regulation by, among other things, adding references to the SOFR-based replacement for the 12-month LIBOR index. This interim final rule does not in any way alter or modify the CFPB’s determination in the 2021 LIBOR Transition final rule in relation to the prime rate as a replacement index.
The interim final rule is effective May 15, 2023 and comments will be accepted on or before 30 days after publication in the Federal Register.
Read the CFPB’s announcement here.
The interim final rule can be found here.
