NYDFS Extends Deadline for "Comprehensive" and "Robust" LIBOR Transition Plans to March 23

On January 23, New York State Department of Financial Services (DFS) Superintendent Linda Lacewell announced in a brief statement¹ and letter² that the DFS extended the deadline for LIBOR transition plans by 45 days to March 23, 2020. Superintendent Lacewell stated that the DFS expects institutions to submit "complete and comprehensive plans" by the new, "final deadline." In the letter, Superintendent Lacewell stated that "[i]t is imperative that regulated institutions with LIBOR exposure have robust and comprehensive plans in place to address their risk."

As we discussed in our previous Advisory, in late December the DFS issued an industry letter directing DFS-regulated institutions to submit responses describing each institution's plans to address its LIBOR cessation and transition risk, detailing aspects from operational readiness to consumer and counterparty communication to corporate governance. The DFS's call for written plans accelerates financial institutions' efforts to assess and manage the risks presented by the likely cessation of LIBOR.

The DFSs' newly stated expectation that plans must be "complete," "comprehensive" and "robust" underscores the importance of devoting adequate time and resources to developing a submission sufficient to meet such expectation. Consideration should be given to a range of issues, and staff should coordinate plans with key stakeholders across the enterprise, as well as boards of directors or their equivalent governing authorities.

Financial institutions that are required to submit LIBOR plans are encouraged to contact any of the authors or your Arnold & Porter contact. The firm's LIBOR working group would be pleased to assist with any questions you may have about the likely cessation of LIBOR, transition to an alternative reference rate, liability and litigation considerations, the range of related adverse effects of such transition, and proper governance processes to address and monitor the transition.

For additional information on the end of LIBOR, see our previous Advisories here, here and here.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.