A LIBOR Carrot?

Later this week, Senate Banking will finally hold a hearing on the LIBOR transition, giving both regulators and the market hope that it may take action on a companion to House legislation providing legal certainty for legacy contracts.  As our in-depth analysis of that bill made clear (see FSM Report LIBOR6), the bill is a carefully-crafted, complex construct designed to reduce the uncertainties and litigation attendant to this tricky transformation of all outstanding contracts tied to LIBOR no matter its imminent end.  We’ll be monitoring this hearing not only due to the critical importance of a smooth LIBOR transition that reflects market realities, but also because the hearing notice suggests the Banking Committee has concerns above and apart from the systemic risk that troubled their House colleagues:  consumer and investor protection.