CFPB LIBOR Proposal Aids Transition

CUNA expressed appreciation for the Consumer Financial Protection Bureau’s (CFPB) proactive effort to amend Regulation Z to facilitate the LIBOR transition for consumer financial products in response to LIBOR’s planned discontinuation after 2021. Currently, LIBOR is expected to be discontinued sometime after 2021 and the CFPB intends for a final rule on LIBOR to take effect on March 15, 2021 (except for certain change-in-term requirements for credit cards and home equity lines of credit.)

“CUNA generally supports the Bureau’s proposal and believes clarity of compliance expectations surrounding the LIBOR discontinuation is beneficial for financial institutions and, ultimately, consumers” the letter reads.

CUNA also offered additional feedback, including:

• Calling on the CFPB to avoid finalizing any rule that would effectively mandate a particular replacement index. It should instead provide flexibility for lenders to make prudent business decisions;
• CUNA supports reasonable disclosures for consumers affected by the LIBOR phase-out and requests the CFPB consider developing a model disclosure template to assist the transition; and
• The CFPB should coordinate with the NCUA in developing tools and resources to assist credit unions with the LIBOR transition.

The CFPB announced plans in this proposal to issue additional written guidance related to the LIBOR transition on its website.