Explore MVALAW.COM

Ed Ivey’s article published by Thomson Reuter’s Futures & Derivatives Law Report

Moore & Van Allen (MVA) Financial Services Counsel Ed Ivey’s article, “The Future Dominant Reference Rate of the Loan Market: Will There Be One Rate to Rule Them All?”, was recently published by Thomson Reuter’s Futures & Derivatives Law Report

In this article Ed provides his thoughts on (i) the developing loan and derivatives markets’ use of non-LIBOR interest rates, specifically Daily Simple SOFR, Term SOFR, BSBY and Ameribor and (ii) analysis and issues that Lenders and Borrowers may wish consider today when looking at entering into a loan referencing any of these ...

UPDATED: Term SOFR vs BSBY vs Ameribor in the Loan Market

This is an update to a previous post. This update highlights the formal endorsement of Term SOFR by the ARRC, expands the discussion to include Ameribor and dives more deeply into the issues associated with Term SOFR swaps resulting in a mismatch with any related hedge by the Lender.

The ARRC has endorsed (HERE) CME’s Term SOFR. One of the bigger pieces to this announcement and earlier related announcements (Scope of Use Cases), is that U.S. regulators will also permit Term SOFR Swaps, when one of the parties is an “end-user”. When looking only at the loan market, what new reference ...

Term SOFR vs BSBY in the Loan Market

Wednesday, the ARRC announced (HERE) the expectation to endorse CME’s Term SOFR in late July or early August. One of the bigger pieces to this announcement is the announcement that U.S. regulators will also permit Term SOFR Swaps, when one of the parties is an “end-user”. When looking only at the loan market, what new reference rate will be the most common? Term SOFR, BSBY or one of the other SOFR rates? A few thoughts below, but at this point I think Lenders need to begin considering how rate options will be discussed with Borrowers. We have worked with clients to develop guidance on ...

Preemption Update and Future Implications: Congress Repeals The OCC’s True Lender Rule

Congress has voted to overturn the Office of the Comptroller of the Currency’s (“OCC’s”) “true lender” rule under the Congressional Review Act (“CRA”), and the President has signed the resolution. Repeal of the “true lender” rule under the CRA prevents the OCC from issuing any substantially similar rule unless authorized by law to do so.  

The True Lender Rule, which became effective December 29, 2020, provided that a bank would be deemed to have made a loan if, on the date of its origination, the bank either (1) is named as the lender in the loan agreement, or (2) funds ...

Financial Services’ Role in Anti-Trafficking, Human Rights, and ESG is at Turning Point

Last month marked the tenth anniversary of the United Nations’ Human Rights Council adoption of the Guiding Principles on Business and Human Rights (“UNGPs”), setting forth the internationally-accepted framework for the role of businesses in promoting and protecting human rights. These principles highlight the risks businesses face in their activities that may be linked to human rights violations. According to the UNGPs, “[b]usiness enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address ...

SEC Chairman Questions the Use of BSBY

In a recent speech, the new SEC Chairman, Gary Gensler, came out questioning the use of BSBY as a replacement to LIBOR, by highlighting a number of “concerns” he has with BSBY and why SOFR is preferable.

HERE is the speech. The last half focuses on BSBY.

Gensler focused largely on the transaction data which underpins BSBY versus the transaction data which underpins SOFR. Here, SOFR has not only a clear advantage, but Gensler also notes weakness in BSBY in the 6- and 12-month tenors. However, there is an important difference between SOFR and BSBY that should have been noted by Gensler ...

No More Dealer-to-Dealer LIBOR Swaps in the OTC Market?

In a press release (HERE) on June 8th, the Commodity Futures Trading Commission (the “CFTC”) published its first release in a series called the “SOFR First Transition Initiative” as a best practice. One goal for this sort of “best practice” is to impact the liquidity in LIBOR and SOFR swaps, thereby slowly (a) increasing the spread on LIBOR swaps and (b) tightening the spread on SOFR swaps. In other words, make LIBOR swaps more expensive and SOFR swaps less expensive. Even for non-dealers, this announcement is important as it is not only a major step in such non-dealers’ ...

Supreme Court Limits FTC's Power to Seek Damages

In AMG Capital Management v. FTC, a unanimous Supreme Court recently struck the Federal Trade Commission’s (the FTC) power to obtain monetary relief under § 13(b) of the FTC Act (the Act). Under § 13(b), the FTC can seek the aid of a court to obtain a permanent injunction. The issue the court addressed is whether Congress, by enacting § 13(b) and using the words “permanent injunction”, granted the FTC authority to obtain monetary relief directly from the courts rather than through the administrative process, which ultimately allows for such relief. The Court held the FTC is not ...

Water Under the Bridge: Revised Interagency Flood Insurance Q&As to Replace Decade-Old Q&As

For the first time in nearly a decade, the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Farm Credit Administration, and the National Credit Union Administration (the Agencies) have proposed new, revised, and reorganized guidance on flood insurance (the Q&As). The Agencies published a first set of 118 proposed Q&As in July 2020, and a second set of 24 proposed Q&As relating to private insurance specifically on March 11, 2021. After the Q&As are consolidated into a single set and finalized, they ...

CFPB Announces Proposed Plan to Prevent Deluge of Post-Pandemic Foreclosures

On April 5, 2021 the Consumer Financial Protection Bureau (CFPB) published a proposed rule entitled Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X. The proposed amendments to Regulation X are aimed to ensure that the approximately 2.5 million borrowers still in forbearance programs will not be ushered immediately into foreclosure when their respective COVID-related forbearance ends. 

The proposed amendments, which apply only to mortgage loans secured by principal residences, contemplate a ...

About MVA White Collar Defense, Investigations, and Regulatory Advice Blog

As government authorities around the world conduct overlapping investigations and bring parallel proceedings in evolving regulatory environments, companies face challenging regulatory and criminal enforcement dynamics. We help keep our clients up to date in these fast-moving areas and to serve as a thought leader.

Stay Informed

* indicates required
Jump to Page

Subscribe To Our Newsletter

Stay Informed

* indicates required

By using this site, you agree to our updated Privacy Policy and our Terms of Use.