CFPB Issues Final Rule to Facilitate Transition from LIBOR

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today finalized a rule facilitating the transition away from the LIBOR interest rate index for consumer financial products. The rule establishes requirements for how creditors must select replacement indices for existing LIBOR-linked consumer loans after April 1, 2022.

No new financial contracts may reference LIBOR as the relevant index after the end of 2021. Starting in June 2023, LIBOR can no longer be used for existing financial contracts. The transition away from LIBOR was set into motion after a criminal rate-setting conspiracy implicated large international banks and undermined public confidence in the index. Approximately $1.4 trillion of consumer loans are estimated to be currently tied to LIBOR.

“The criminal manipulation of LIBOR by global financial institutions was extremely costly to our country,” said CFPB Director Rohit Chopra. “LIBOR will soon be a relic of history, and we will be working to ensure that companies make an orderly transition away from this index.”

Read Director Chopra’s statement on the transition from LIBOR.

The final rule, effective April 1, 2022, includes closed-end credit provisions that require creditors to choose an index comparable to LIBOR when changing the index of a variable rate loan, or consider it a refinancing for purposes of Regulation Z.

Read the final rule.
Read the FAQs.
Read the blog post with consumer advice on navigating the transition away from LIBOR.