QTR . 4 | 2021
••• IN THIS ISSUE
> LIBOR Index is Discontinued : Here ’ s What Financial Institutions Should Know
> New Initiatives to Combat Redlining Practices
> Bank Secrecy Act / Anti-Money Laundering ( BSA / AML ) Examination Manual Gets Updates
> CFPB Pledges Enhanced Scrutiny for Financial Institutions Depending Heavily on Overdraft Fees
LIBOR Index is Discontinued : Here ’ s What Financial Institutions Need to Know
After much anticipation , the Consumer Financial Protection Bureau ( CFPB ) released the
final LIBOR Transition rule . The amendments to Regulation Z address the transition away from the London Inter-Bank Offered Rate ( LIBOR ). Used to calculate interest rates around the world , most notably short-term interest rates , the LIBOR has been in service for many years . The transition away from LIBOR will not be complete until June 2023 . Financial institutions , via the CFPB , have been encouraged to make the switch to other indexes .
The LIBOR index is used in a variety of lending programs . Many members / customers will find changes to their adjustable / variable rate loans or lines of credits , reverse mortgages , home equity lines of credit ( HELOCs ), credit cards , student loans and any other consumer loans that use LIBOR as an index . The CFPB has already taken steps to help consumers and financial institutions with the transition . By working with financial entities to develop a different approach to averaging interest rates , financial institutions should have the tools they need to help consumers make a smooth switch to a different index . Additionally , financial institutions should be well-equipped to understand and use new indexes .
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