LIBOR Transition Rescue Advances

Advancing a long-delayed effort to clarify the LIBOR transition, a bipartisan group of Senate Banking Members today introduced legislation dictating replacement rates for legacy contracts.  The language is a companion to a revised version of House-introduced standards (see Client Report LIBOR5)  that among other things reflects Sen. Toomey’s (R-PA) concerns that the bill be narrowly tailored to a defined class of legacy contracts rather than, as some feared, stipulating new benchmark rates across the financial market for new contracts.  The bill is supported by virtually all financial-industry advocacy organizations and should now advance quickly to the Senate floor since the Senate Banking Committee has already held hearings on this issue.  At today’s hearing (see FedFin’s report), Chairman Powell strongly endorsed the bill and reiterated the need for rapid action.

Powell Defends Fed’s Institutional Legitimacy, Continuing Function as Nominations Stall

Today’s Senate Banking hearing with Chairman Powell featured continuing partisan wrangling over stalled Fed nominations showed no sign of resolution after Republicans essentially forced Mr. Powell to concur that his powers to act pro tem ensured continuing central-bank function.  Ranking Member Toomey (R-PA) also renewed his campaign against Reserve Banks, arguing that they are anachronistic and have strayed from core mandate concerns.