Members of the House Financial Services Committee cited leveraged lending, cybersecurity and the switch to a new interest rate benchmark among potential systemic risks that keep them up at night.
The Treasury Secretary says Facebook’s cryptocurrency plan creates national security issues; the New York Fed chief tells financial firms to stop dragging their feet and move on from Libor.
The Alternative Reference Rates Committee promotes the adoption of a new Secured Overnight Financing Rate index rate to replace Libor in pricing hybrid adjustable-rate mortgages within the next two years. The change would be the first application of SOFR to a consumer-loan product.
Banks shouldn’t have trouble this year, but the rules may change next year; U.S. authorities are probing possible AML compliance violations at the German bank.
The banking industry isn’t prepared to transition away from a key financial benchmark in 2021, and steps need to be taken now to avoid market disruptions.
Although Libor will will not be phased out until at least 2021, Randal Quarles said making the switch early is "consistent with prudent risk management."