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

Summary

Creates a single nationwide way to replace LIBOR in old contracts that do not name a practical backup rate. Congress found LIBOR is used as a benchmark in more than $200,000,000,000,000 of contracts worldwide, many contracts lack a clear replacement, and stopping LIBOR could cause disruptive lawsuits. Its goals are to set that replacement process, prevent related lawsuits, let contracts that already name a workable replacement follow their terms, and deal with 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

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note set out below and Tables.

Statutory Notes and Related Subsidiaries

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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

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Statutory Notes and Related Subsidiaries

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Citations & Metadata