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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 marks 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 ...

The CFPB’s Final Rule on COVID-19 Mortgage Servicing

On June 28, 2021, the Consumer Financial Protection Bureau issued a final rule (2021 Rule) amending certain provisions of Regulation X. The 2021 Rule establishes temporary procedural safeguards to borrowers impacted by COVID-19 before a foreclosure can be noticed or commenced against their primary residence[1] and provides for streamlined loss mitigation reviews. The CFPB stated that the 2021 Rule “will help ensure a smooth and orderly transition as the other Federal and State protections end by providing borrowers with a meaningful opportunity to explore ways to resume ...

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 ...

Jim McLoughlin and Neil Bloomfield’s Article Published by Westlaw: 3rd Circuit panel raises the bar on risk disclosures as the trend toward greater disclosure continues

Moore & Van Allen (MVA) Litigation Member Jim McLoughlin and Financial Regulatory Advice & Response Member Neil Bloomfield‘s article titled, “3rd Circuit panel raises the bar on risk disclosures as the trend toward greater disclosure continues” was published by Westlaw on March 30, 2021.

The Article

It had been an article of faith in the securities legal community that a registrant has no obligation to disclose possible wrongdoing or a government investigation into its conduct absent some statement that would be rendered misleading without such a disclosure.

However, in ...

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