§5804 — Title 12 Banks and Banking | U.S. Code

Summary

Treats a rate the Board picks to replace LIBOR, and any contract fixes tied to that choice, as a proper and comparable substitute. The chosen replacement is treated as commercially reasonable, similar in rate and method, and having similar past swings for Truth in Lending rules. Using the Board’s replacement counts as substantial performance of LIBOR-based rights or duties. Says picking or using the Board replacement, or making or carrying out the required contract fixes, cannot be used to stop or change someone’s right to a payment or its timing. It cannot be used to excuse performance, let someone end or suspend a contract, be called a breach, or void a contract. People who select or use the Board replacement, or who implement the conforming changes, are protected from lawsuits or damages for doing so. Except where the law says otherwise, this chapter does not mean other replacements or other contract changes are invalid.

Title 12, §5804

Banks and Banking — Source: USLM XML via OLRC

(a)A Board-selected benchmark replacement and the selection or use of a Board-selected benchmark replacement as a benchmark replacement under or with respect to a LIBOR contract, and any benchmark replacement conforming changes, shall constitute—

(1)a commercially reasonable replacement for and a commercially substantial equivalent to LIBOR;

(2)a reasonable, comparable, or analogous rate, index, or term for LIBOR;

(3)a replacement that is based on a methodology or information that is similar or comparable to LIBOR;

(4)substantial performance by any person of any right or obligation relating to or based on LIBOR; and

(5)a replacement that has historical fluctuations that are substantially similar to those of LIBOR for purposes of the Truth in Lending Act (15 U.S.C. 1601 note) 11 So in original. Probably should be “(15 U.S.C. 1601 et seq.)”. and regulations promulgated under that division.22 So in original. Probably should be “that Act.”

(b)Neither the selection or use of a Board-selected benchmark replacement as a benchmark replacement nor the determination, implementation, or performance of benchmark replacement conforming changes under section 5803 of this title may—

(1)be deemed to impair or affect the right of any person to receive a payment, or to affect the amount or timing of such payment, under any LIBOR contract; or

(2)have the effect of—

(A)discharging or excusing performance under any LIBOR contract for any reason, claim, or defense (including any force majeure or other provision in any LIBOR contract);

(B)giving any person the right to unilaterally terminate or suspend performance under any LIBOR contract;

(C)constituting a breach of any LIBOR contract; or

(D)voiding or nullifying any LIBOR contract.

(c)No person shall be subject to any claim or cause of action in law or equity or request for equitable relief, or have liability for damages, arising out of—

(1)the selection or use of a Board-selected benchmark replacement;

(2)the implementation of benchmark replacement conforming changes; or

(3)with respect to a LIBOR contract that is not a consumer loan, the determination of benchmark replacement conforming changes,

(d)The selection or use of a Board-selected benchmark replacement or the determination, implementation, or performance of benchmark replacement conforming changes under section 5803 of this title shall not be deemed to—

(1)be an amendment or modification of any LIBOR contract; or

(2)prejudice, impair, or affect the rights, interests, or obligations of any person under or with respect to any LIBOR contract.

(e)Except as provided in subsection 33 So in original. Probably should be “subsection”. (a), (b), or (c)(1) of section 5803 of this title, nothing in this chapter may be construed to create any negative inference or negative presumption regarding the validity or enforceability of—

(1)any benchmark replacement (including any method for calculating, determining, or implementing an adjustment to the benchmark replacement to account for any historical differences between LIBOR and the benchmark replacement) that is not a Board-selected benchmark replacement; or

(2)any changes, alterations, or modifications to or with respect to a LIBOR contract that are not benchmark replacement conforming changes.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Truth in Lending Act, referred to in subsec. (a)(5), is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, which is classified generally to subchapter I (§ 1601 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 101 of Pub. L. 90–321, set out as a

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note under section 1601 of Title 15 and Tables. This chapter, referred to in subsecs. (c) and (e), 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

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note set out under section 5801 of this title and Tables.

§5804 Continuity of contract and safe harbor

Summary

Title 12, §5804

Notes & Related Subsidiaries

Editorial Notes

References in Text

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Citations & Metadata