Interest rates

The move away from the scandal-plagued London interbank offered rate is going smoothly, according to a new survey of lenders and corporate borrowers. But many customers still face operational challenges ahead of a mid-2023 deadline for switching older loans.

The company has agreed to pay at least $3.75 million to resolve allegations that it violated the District of Columbia’s 24% interest rate cap.

The Secured Overnight Financing Rate has benefited — amid the phaseout of Libor — from positive comments by regulators. Is a multirate environment, which some banks would prefer, still possible?

Just three months ago, U.S. banks were still using the expiring benchmark rate for the vast majority of their new loans. But regulators said Friday the transition to alternative rates has accelerated ahead of a year-end cutoff.

Forget the goods supply-chain crisis threatening global risk assets: the real test comes next year when a service-sector boom drives labor costs higher and pressures central banks to tighten policy more decisively.

Many banks are still making loans tied to the scandal-plagued benchmark despite years of preparation for its demise. The end of 2021 could prove hectic as bankers scramble to implement changes and explain them to commercial borrowers.

Federal Reserve Vice Chair Randal Quarles has made it clear that banks failing to make the transition away from the benchmark rate could face supervisory consequences.

Starting Thursday, firms should stop issuing new loans, bonds and securitizations tied to the discredited benchmark, according to the Bank of England.

Legacy contracts using the London interbank offered rate — which is set to be phased out at the end of this year — were granted a reprieve to mid-2023. However, there is no wiggle room on when the rate will expire for new deals, said Federal Reserve Vice Chairman Randal Quarles.

Some of the world’s biggest banks are urging a U.S. judge not to immediately terminate Libor after a group of borrowers filed suit claiming the benchmark was the work of a “price-fixing cartel.”