,,ib ,union ,calendar ,no4 #adg #aagth ,,congress #ast ,session ,h4 ,r4 #dfaf ,report ,no4 #aag-bjf1 ,part ,i ,,in ,,the ,,house ,,of ,,representatives ,july #bb1 #bjba,mr4 ,sherman introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committees on ,ways and ,means1 and ,education and ,labor1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,december #g1 #bjba,reported from the ,committee on ,financial ,services with an amendment,strike out all after the enacting clause and insert the part printed in italic ,december #g1 #bjba;,committees on ,ways and ,means and ,education and ,labor discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed,for text of introduced bill1 see copy of bill as introduced on ,july #bb1 #bjba ,a ,,bill ,to deem certain references to ,,libor as referring to a replacement benchmark rate upon the occurrence of certain events affecting ,,libor1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,adjustable ,interest ,rate 7,,libor7 ,act of #bjba4 #b4 ,findings and purpose 7a7 ,findings ,the ,congress finds that-- 7#a7 ,,libor is used as a benchmark rate in more than #bjj trillion of contracts worldwide2 7#b7 a significant number of existing contracts that reference ,,libor do not provide for the use of a clearly defined or practicable replacement benchmark rate when ,,libor is discontinued2 and 7#c7 the cessation or non-representativeness of ,,libor could result in disruptive litigation related to existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate4 7b7 ,purpose ,it is the purpose of this ,act-- 7#a7 to establish a clear and uniform process1 on a nationwide basis1 for replacing ,,libor in existing contracts the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate1 without affecting the ability of parties to use any appropriate benchmark rate in new contracts2 7#b7 to preclude litigation related to existing contracts the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate2 and 7#c7 to allow existing contracts that reference ,,libor but provide for the use of a clearly defined fallback and practicable replacement rate1 to operate according to their terms4 7c7 ,rule of construction ,nothing in this ,act shall be construed to disfavor the use of any benchmark rate on a prospective basis4 #c4 ,definitions ,as used in this ,act1 the following terms shall have the following meanings3 7#a7 ,benchmark shall mean an index of interest rates or dividend rates that is used1 in whole or in part1 as the basis of or as a reference for calculating or determining any valuation1 payment or other measurement4 7#b7 ,benchmark ,administrator means a person that publishes a ,benchmark for use by third parties4 7#c7 ,benchmark ,replacement shall mean a ,benchmark1 or an interest rate or dividend rate 7which may or may not be based in whole or in part on a prior setting of ,,libor71 to replace ,,libor or any interest rate or dividend rate based on ,,libor1 whether on a temporary1 permanent1 or indefinite basis1 under or in respect of a ,,libor ,contract4 7#d7 ,benchmark ,replacement ,conforming ,changes shall mean any technical1 administrative1 or operational changes1 alterations1 or modifications that-- 7,a7 the ,board establishes for the purpose of facilitating the implementation1 administration1 and calculation of the ,board-,selected ,benchmark ,replacement2 or 7,b7 in the reasonable judgment of a ,calculating ,person1 are otherwise necessary or appropriate to permit the implementation1 administration1 and calculation of the ,board-,selected ,benchmark ,replacement under or in respect of a ,,libor ,contract after giving due consideration to any ,benchmark ,replacement ,conforming ,changes under subparagraph 7,a74 7#e7 ,board means the ,board of ,governors of the ,federal ,reserve ,system4 7#f7 7,a7 ,board-,selected ,benchmark ,replacement shall mean a ,benchmark ,replacement identified by the ,board that is based on ,,sofr4 7,b7 ,the ,board shall adjust the ,board-,selected ,benchmark ,replacement for each category of ,,libor ,contract that the ,board may identify to-- 7i7 apply to each ,,libor tenor2 and 7ii7 incorporate the relevant ,tenor ,spread ,adjustment4 7,c7 ,for ,consumer ,loans1 the ,board-,selected ,benchmark ,replacement shall initially reflect the spread between the ,board-,selected ,benchmark ,replacement and ,,libor immediately before the ,,libor ,replacement ,date and shall incorporate the relevant ,tenor ,spread ,adjustment over a one-year transition period4 7#g7 ,calculating ,person shall mean1 with respect to any ,,libor ,contract1 any person 7which may be the ,determining ,person7 responsible for calculating or determining any valuation1 payment1 or other measurement based on a ,benchmark4 7#h7 ,consumer ,loan shall mean a consumer credit transaction4 ,for purposes of this paragraph1 the terms consumer and credit have the meaning given those terms1 respectively1 under section #ajc of the ,truth in ,lending ,act 7#ae ,u4,s4,c4 #afjb74 7#i7 ,determining ,person shall mean1 with respect to any ,,libor ,contract1 any person with the authority1 right1 or obligation1 including on a temporary basis1 7as identified by the provisions of the ,,libor ,contract1 or as identified by the governing law of the ,,libor ,contract1 as appropriate7 to determine a ,benchmark ,replacement4 7#aj7 ,fallback ,provisions shall mean terms in a ,,libor ,contract for determining a ,benchmark ,replacement1 including any terms relating to the date on which the ,benchmark ,replacement becomes effective4 7#aa7 ,,libor shall mean the overnight and #a-1 #c-1 #f-1 and #ab-month tenors of ,u4,s4 dollar ,,libor 7formerly known as the ,london interbank offered rate7 as administered by ,,ice ,benchmark ,administration ,limited 7or any predecessor or successor thereof74 ,,libor shall not include the #a-week or #b-month tenors of ,u4,s4 dollar ,,libor4 7#ab7 ,,libor ,contract shall mean1 without limitation1 any contract1 agreement1 indenture1 organizational documents1 guarantee1 mortgage1 deed of trust1 lease1 ,security 7whether representing debt or equity1 and including any interest in a corporation1 a partnership1 or a limited liability company71 instrument1 or other obligation or asset that1 by its terms1 continues in any way to use ,,libor as a ,benchmark as of the applicable ,,libor ,replacement ,date4 7#ac7 ,,libor ,replacement ,date shall mean the first ,london banking day after ,june #cj1 #bjbc1 unless the ,board determines that any ,,libor tenor will cease to be published or cease to be representative on a different date4 7#ad7 ,security shall have the meaning assigned to such term in section #b7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;b7a774 7#ae7 ,,sofr shall mean the ,secured ,overnight ,financing ,rate published by the ,federal ,reserve ,bank of ,new ,york 7or a successor administrator74 7#af7 ,tenor ,spread ,adjustment shall mean-- 7,a7 #j4jjfdd percent for overnight ,,libor2 7,b7 #j4aaddh percent for #a-month ,,libor2 7,c7 #j4bfafa percent for #c-month ,,libor2 7,d7 #j4dbhbf percent for #f-month ,,libor2 and 7,e7 #j4gaeac percent for #ab-month ,,libor4 #d4 ,,libor contracts 7a7 ,on the ,,libor ,replacement ,date1 the ,board-,selected ,benchmark ,replacement shall1 by operation of law1 be the ,benchmark ,replacement for any ,,libor ,contract that1 after giving any effect to subsection 7b7-- 7#a7 contains no ,fallback ,provisions2 or 7#b7 contains ,fallback ,provisions that identify neither-- 7,a7 a specific ,benchmark ,replacement2 nor 7,b7 a ,determining ,person4 7b7 ,on the ,,libor ,replacement ,date1 any references in the ,fallback ,provisions of a ,,libor ,contract to-- 7#a7 a ,benchmark ,replacement that is based in any way on any ,,libor value1 except to account for the difference between ,,libor and the ,benchmark ,replacement1 or 7#b7 a requirement that a person 7other than a ,benchmark ,administrator7 conduct a poll1 survey1 or inquiries for quotes or information concerning interbank lending or deposit rates1 shall be disregarded as if not included in the ,fallback ,provisions of such ,,libor ,contract and shall be deemed null and void and without any force or effect4 7c7 ,subject to subsection 7g77#b71 a ,determining ,person shall have authority under this ,act1 but shall not be required1 to select the ,board-,selected ,benchmark ,replacement as the ,benchmark ,replacement4 7d7 ,any selection by a ,determining ,person of the ,board-,selected ,benchmark ,replacement pursuant to subsection 7c7 shall be-- 7#a7 irrevocable2 7#b7 made by the earlier of the ,,libor ,replacement ,date and the latest date for selecting a ,benchmark ,replacement according to the terms of such ,,libor ,contract2 and 7#c7 used in any determinations of the ,benchmark under or in respect of such ,,libor ,contract occurring on and after the ,,libor ,replacement ,date4 7e7 ,if a ,determining ,person has authority to select the ,board-,selected ,benchmark ,replacement under subsection 7c7 but does not select a ,benchmark ,replacement by the date specified in subsection 7d77#b71 then1 on the ,,libor ,replacement ,date1 the ,board-,selected ,benchmark ,replacement shall1 by operation of law1 be the ,benchmark ,replacement for the ,,libor ,contract4 7f7 ,if the ,board-,selected ,benchmark ,replacement becomes the ,benchmark ,replacement for a ,,libor ,contract pursuant to subsection 7a71 7c71 or 7e7 then all ,benchmark ,replacement ,conforming ,changes shall become an integral part of such ,,libor ,contract by operation of law4 ,for the avoidance of doubt1 a ,calculating ,person shall not be required to obtain consent from any other person prior to the adoption of ,benchmark ,replacement ,conforming ,changes4 7g7 ,the provisions of this ,act shall not alter or impair-- 7#a7 any written agreement specifying that a ,,libor ,contract shall not be subject to this ,act2 7#b7 any ,,libor ,contract that contains ,fallback ,provisions that identify a ,benchmark ,replacement that is not based in any way on any ,,libor value 7including1 but not limited to1 the prime rate or the ,effective ,federal ,funds ,rate71 except that such ,,libor ,contract shall be subject to subsection 7b72 7#c7 any ,,libor ,contract subject to subsection 7c7 as to which a ,determining ,person does not elect to use a ,board-,selected ,benchmark ,replacement pursuant to subsection 7c71 except to the extent that such ,,libor ,contract is subject to subsection 7b7 or 7e72 7#d7 the application to a ,board-,selected ,benchmark ,replacement of any cap1 floor1 modifier1 or spread adjustment to which ,,libor had been subject pursuant to the terms of a ,,libor ,contract2 or 7#e7 any provisions of ,federal consumer financial law that requires creditors to notify borrowers regarding a change-in-terms4 7h7 ,except as provided in section #e7;c71 the provisions of this ,act shall not alter or impair the rights or obligations of any person1 or the authorities of any agency1 under ,federal consumer financial law 7as defined in section #ajjb7ad7 of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ab ,u4,s4,c4 #edha7ad774 #e4 ,continuity of contract and safe harbor 7a7 ,a ,board-,selected ,benchmark ,replacement and the selection or use of a ,board-,selected ,benchmark ,replacement as a ,benchmark ,replacement under or in respect of a ,,libor ,contract1 as well as any ,benchmark ,replacement ,conforming ,changes1 by operation of section #d shall constitute-- 7#a7 a commercially reasonable replacement for and a commercially substantial equivalent to ,,libor2 7#b7 a reasonable1 comparable1 or analogous rate1 index1 or term for ,,libor2 7#c7 a replacement that is based on a methodology or information that is similar or comparable to ,,libor2 7#d7 substantial performance by any person of any right or obligation relating to or based on ,,libor2 and 7#e7 a replacement that has historical fluctuations that are substantially similar to those of ,,libor for purposes of the ,truth in ,lending ,act and its implementing regulations4 7b7 ,neither of 7#a7 the selection or use of a ,board-,selected ,benchmark ,replacement as a ,benchmark ,replacement or 7#b7 the determination1 implementation1 or performance of ,benchmark ,replacement ,conforming ,changes1 in each case by operation of section #d1 shall 7,a7 be deemed to impair or affect the right of any person to receive a payment1 or to affect the amount or timing of such payment1 under any ,,libor ,contract or 7,b7 have the effect of 7i7 discharging or excusing performance under any ,,libor ,contract for any reason1 claim1 or defense 7including1 but not limited to1 any force majeure or other provision in any ,,libor ,contract71 7ii7 giving any person the right to unilaterally terminate or suspend performance under any ,,libor ,contract1 7iii7 constituting a breach of any ,,libor ,contract1 or 7iv7 voiding or nullifying any ,,libor ,contract4 7c7 ,no person shall be subject to any claim or cause of action in law or equity or request for equitable relief1 or have liability for damages1 arising solely out of the selection or use of a ,board-,selected ,benchmark ,replacement or the determination1 implementation1 or performance of ,benchmark ,replacement ,conforming ,changes1 in each case by operation of section #d2 provided1 however1 that any person 7including a ,calculating ,person7 shall remain subject to any existing legal1 regulatory1 or contractual obligations to correct servicing or other ministerial errors under or in respect of a ,,libor ,contract4 7d7 ,the selection or use of a ,board-,selected ,benchmark ,replacement or the determination1 implementation1 or performance of ,benchmark ,replacement ,conforming ,changes1 in each case by operation of section #d1 shall not be deemed to-- 7#a7 be an amendment or modification of any ,,libor ,contract2 or 7#b7 prejudice1 impair1 or affect any person's rights1 interests1 or obligations under or in respect of any ,,libor ,contract4 7e7 ,except as provided in either subsections 7a71 7b71 or 7c7 of section #d1 the provisions of this ,act shall not be interpreted as creating any negative inference or negative presumption regarding the validity or enforceability of-- 7#a7 any ,benchmark ,replacement 7including any method for calculating1 determining1 or implementing an adjustment to the ,benchmark ,replacement to account for any historical differences between ,,libor and the ,benchmark ,replacement7 that is not a ,board-,selected ,benchmark ,replacement2 or 7#b7 any changes1 alterations1 or modifications to or in respect of a ,,libor ,contract that are not ,benchmark ,replacement ,conforming ,changes4 #f4 ,preemption 7a7 ,this ,act and the regulations hereunder shall supersede any and all laws1 statutes1 rules1 regulations1 or standards of any ,state1 the ,district of ,columbia1 or any territory or possession of the ,united ,states1 insofar as they provide for the selection or use of a ,benchmark ,replacement or related conforming changes4 7b7 ,no provision of ,state or local law that expressly limits the manner of calculating interest1 including the compounding of interest1 shall apply to the selection or use of a ,board-,selected ,benchmark ,replacement or ,benchmark ,replacement ,conforming ,changes4 #g4 ,trust indenture act of #aici ,section #caf of the ,trust ,indenture ,act of #aici 7#ae ,u4,s4,c4 #ggppp7 is amended-- 7#a7 by striking and after of subsection 7a71 in subsection 7b72 and 7#b7 by inserting 1 and except that the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security shall not be deemed to be impaired or affected by any change occurring by the application of section #d of the ,adjustable ,interest ,rate 7,,libor7 ,act of #bjba to any indenture security after subject to such lien in subsection 7b74 #h4 ,rulemaking ,not later than #ahj days after the date of enactment of this ,act1 the ,board shall issue such regulations as may be necessary or appropriate to enable it to administer and carry out the purposes of this ,act4 #i4 ,interbank offered rate transition rule of construction ,none of-- 7#a7 the selection or use of a ,board-,selected ,benchmark ,replacement as a ,benchmark ,replacement1 7#b7 the determination1 implementation1 or performance of ,benchmark ,replacement ,conforming ,changes2 or 7#c7 the application to any ,,libor ,contract of1 or the agreement by parties thereto to terms consistent with1 section #d1 shall be treated as a transfer1 disposition1 or conversion of property4 ,december #g1 #bjba,reported from the ,committee on ,financial ,services with an amendment,december #g1 #bjba;,committees on ,ways and ,means and ,education and ,labor discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed