§5801 — Title 12 Banks and Banking | U.S. Code

Summary

Creates one clear national way to replace LIBOR in existing contracts that do not have a clear, usable backup rate. Congress found LIBOR is used in more than $200,000,000,000,000 of contracts, many of those contracts lack a replacement, and ending LIBOR could cause disruptive lawsuits. The law lets contracts that already have a clear backup follow their terms, aims to prevent lawsuits over contracts without backups, allows new contracts to use any suitable benchmark, and handles LIBOR references in federal law.

Title 12, §5801

Banks and Banking — Source: USLM XML via OLRC

(a)Congress finds that—

(1)LIBOR is used as a benchmark rate in more than $200,000,000,000,000 worth of contracts worldwide;

(2)a significant number of existing contracts that reference LIBOR do not provide for the use of a clearly defined or practicable replacement benchmark rate when LIBOR is discontinued; and

(3)the cessation or nonrepresentativeness of LIBOR could result in disruptive litigation related to existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate.

(b)It is the purpose of this chapter—

(1)to establish a clear and uniform process, on a nationwide basis, for replacing LIBOR in existing contracts the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate, without affecting the ability of parties to use any appropriate benchmark rate in new contracts;

(2)to preclude litigation related to existing contracts the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate;

(3)to allow existing contracts that reference LIBOR but provide for the use of a clearly defined and practicable replacement rate, to operate according to their terms; and

(4)to address LIBOR references in Federal law.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsec. (b), was in the original “this division”, meaning div. U of Pub. L. 117–103, Mar. 15, 2022, 136 Stat. 825, known as the Adjustable Interest Rate (LIBOR) Act, which is classified principally to this chapter. For complete classification of div. U to the Code, see

Short Title

note set out below and Tables.

Statutory Notes and Related Subsidiaries

Short Title

Pub. L. 117–103, div. U, § 101, Mar. 15, 2022, 136 Stat. 825, provided that: “This division [enacting this chapter and amending section 77ppp of Title 15, Commerce and Trade, and section 1087–1 of Title 20, Education] may be cited as the ‘Adjustable Interest Rate (LIBOR) Act’.”

§5801 Findings and purpose

Summary

Title 12, §5801

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Statutory Notes and Related Subsidiaries

Short Title

Citations & Metadata