Adjustable Interest Rate (Libor) Act of 2021

Floor Speech

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Mr. HILL. Mr. Speaker, I thank the distinguished ranking member of the House Financial Services Committee for yielding and, of course, the chairman of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, Mr. Sherman, for his leadership. On this side of the aisle, there is absolutely no debate that Mr. Sherman has the most passion on this topic as a certified public accountant and that his questions about improving this bill are unlimited.

I rise today in support of this effort, flawed as it might be, and support the Adjustable Interest Rate Act of 2021.

As the chairman of the subcommittee said, for decades, the London interbank market has been the institutional fixed income rate used by hundreds of market participants to benefit American families because that LIBOR rate has been a very competitive rate and facilitated securities being issued that facilitated in more houses being built for more families in America, a liquid market for our families' credit card debt, and important student loan debt.

So this rate is critically important, and it is a part of, also, the U.S. dollar, Mr. Speaker, being at the forefront of the global securities market.

As the ranking member on our Housing, Community Development, and Insurance Subcommittee, it was the go-to rate for mortgage-backed securities and for use of the government secondary mortgage market for Fannie Mae and Freddie Mac. I think the chairman has outlined the importance of this.

This bill deals with all those contracts that depended on that LIBOR rate that just stubbornly don't have an alternative right now. As we approach the end of the quote for this important interest rate, there are contracts--the chair says some $16 trillion of bonds outstanding-- that need this replacement contractual rate.

This bill does not increase government. This bill does not increase regulatory power. This bill facilitates the private-sector bond market solving this tough, thorny issue for the stubborn minority of bond market transactions that we call these legacy issues.

Now, the gentleman from Michigan, the gentleman from California, and I have listened to and worked on this bill for years, and we thought the Federal Reserve and the regulators were going to solve this problem years ago. That is what they told us years ago.

But as those years have gone by, they found that they can't solve this problem in the regulatory agencies, and they have turned to Congress to legislate and craft a narrow fix to solve these tough contracts.

Mr. Speaker, that is why I am in favor of taking this action today. I encourage my colleagues on both sides of the aisle--this is a technical issue, and it is an eyes-glazed-over issue, but it affects all the families in our country. It affects the importance of the U.S. dollar in capital markets. When LIBOR concludes in June 2023, we don't want any gap, Mr. Speaker, in the ability to have those legacy contracts move forward.

I don't believe this is a bill that anyone should oppose. I think we all should support it. It has the support of the six regulatory agencies; it has the support of the financial industry; and it deals with reality.

Mr. Speaker, I want to thank my friend from Michigan for yielding me the time. I thank him for his work. Yes, this process was flawed, first in the hands of the regulators, and, secondly, I think it could have been far better in the majority, particularly as it relates to getting the views of the Ways and Means Committee and the Education and Labor Committee.

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