Introduced in House (07/22/2021)
Adjustable Interest Rate (LIBOR) Act of 2021
This bill provides for the transition of certain financial contracts away from the London Interbank Offered Rate (LIBOR), a reference interest rate based upon the lending terms certain banks offer to each other for various lengths of time. LIBOR is set to be retired in 2023. Various financial contracts reference LIBOR as a benchmark for prevailing interest rates and use LIBOR in calculating certain payments or obligations.
In the event a contract referencing LIBOR does not have a fallback or replacement rate provision in effect when LIBOR is retired, or a replacement rate is not selected by a determining person as defined by the bill, the bill provides for a transition to a replacement rate selected by the Board of Governors of the Federal Reserve System. The bill also provides for conforming changes to these contracts, the continuity and enforceability of these contracts, and protections against liability as a result of such a transition.
The bill also addresses the tax consequences of such a transition. Specifically, the selection or use of a replacement rate; the determination, implementation, or performance of related conforming changes to a contract; or other application of changes related to the transition shall not be treated as a sale, exchange, or other disposition of property for tax purposes.
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