FEDERAL GOVERNMENT RELATIONS
Durbin Amendment Expansion Out of Congressional Omnibus
Congress left numerous industry-opposed legislative initiatives out of its end-of-year omnibus spending bill, including language to extend the Durbin Amendment to credit cards. Lawmakers also excluded an industry-opposed effort to impose new routing restrictions on credit cards from the spending deal.
Other Key Issues: Community bank advocacy groups also helped ensure the omnibus:
- Leaves out other problematic issues, including establishing a postal banking pilot program, new overdraft restrictions and expanded credit union authority;
- Includes an extension of the National Flood Insurance Program;
- Provides $324 million for the Community Development Financial Institutions (CDFI) Fund – an increase of $29 million over the previous year – and directs the fund to address concerns raised by CDFIs and stakeholders regarding changes to the certification application;
- Includes funding for the Office of Terrorism and Financial Intelligence for improved blockchain analysis tools, training on crypto-related investigations and investigative support to reduce crimes related to ransomware or crypto.
Senate Confirms Gruenberg, FDIC Board Nominations
The Senate voted Monday to confirm the nominations of Martin Gruenberg to serve as Federal Deposit Insurance Corp. chairman, Travis Hill as vice chairman and Jonathan McKernan as FDIC board member. Gruenberg has served as acting FDIC chairman since February and was chairman from 2012 to 2018. Hill previously worked at the FDIC for four years as senior adviser to the chairman and deputy to the chairman for policy. McKernan currently is senior counsel at the Federal Housing Finance Agency and previously was a senior policy adviser at the U.S. Department of the Treasury and to former Sen. Bob Corker, R-Tenn.
Fed Adopts Final Rule Implementing Libor Act
The Federal Reserve last Friday adopted a final rule that implements the Adjustable Interest Rate Act by identifying benchmark rates based on the Secured Overnight Financing Rate (SOFR) that will replace Libor in certain financial contracts after June 30, 2023. The final rule ensures that Libor contracts adopting a benchmark rate selected by the Fed will not be interrupted or terminated following Libor’s replacement. The rule will be effective 30 days after publication in the Federal Register.
As required by the law, the final rule identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month and 12-month Libor in contracts subject to the act, the Fed indicated. The contracts include U.S. contracts that do not mature before publication of Libor ends (on June 30, 2023) and that lack adequate "fallback" provisions that would replace Libor with a practicable replacement benchmark rate.
In response to comments, the final rule restates safe harbor protections contained in the Libor Act for selection or use of the replacement benchmark rate selected by the Fed. It also clarifies who would be considered a "determining person" able to choose to use the replacement benchmark rate selected by the Fed for use for certain Libor contracts, the agency indicated.
In related news, the Financial Stability Board last Friday published a progress report on the Libor transition. Among other provisions, the report calls for market participants to take active steps to address existing legacy contracts in preparation for the end of the remaining panel-based U.S. dollar Libor settings and for the winding down of temporary synthetic Libor rates.