Michael Best's Cheryl Aaron was quoted in Law360's article, "4 Things Smaller Banks Can Do To Prep For Libor's End" on February 25, 2019.
Preparations are under way on Wall Street for the end to what’s been called the world’s most important number, but midsize and smaller banks shouldn’t procrastinate when it comes to planning for the transition away from the London Interbank Offered Rate.
Regulators and financial industry representatives have been working hard to arrange a graceful exit for Libor, a family of interest-rate benchmarks that is referenced in contracts for hundreds of trillions of dollars of loans, swaps and other financial products. This exit could come as soon as the end of 2021 — that’s the target date that U.K. regulators have set for withdrawing official support for Libor, which has been tainted in recent years by rigging scandals and other concerns about its reliability.
It’s a massive project with multiple moving parts, and the pressure facing banks and their counterparties to get it right is tremendous. If solid replacements aren’t lined up to succeed Libor, and if contracts don’t switch over to these successors seamlessly once Libor fades from the scene, the risk of market disruptions, litigation from unhappy customers and destabilized balance sheets is real.
“Libor is just so ingrained,” Cheryl Isaac Aaron, senior counsel at Michael Best & Friedrich LLP, told Law360. “Even if these firms hear all of Libor’s shortcomings, they don’t want to change anything.”
To read the entire Law360 article, click here.