II 

117TH CONGRESS 

2D SESSION S. 3844 

To establish a clear and uniform process, on a nationwide basis, for replacing 

the London interbank offered rate in existing contracts, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 15, 2022 

Mr. TESTER (for himself, Mr. TILLIS, Mr. BROWN, and Mr. TOOMEY) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To establish a clear and uniform process, on a nationwide 

basis, for replacing the London interbank offered rate 

in existing contracts, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Economic Continuity 

5 and Stability Act’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds that— 


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1 (1) LIBOR is used as a benchmark rate in 

2 more than $200,000,000,000,000 worth of contracts 

3 worldwide; 

4 (2) a significant number of existing contracts 

5 that reference LIBOR do not provide for the use of 

6 a clearly defined or practicable replacement bench7 mark rate when LIBOR is discontinued; and 

8 (3) the cessation or nonrepresentativeness of 

9 LIBOR could result in disruptive litigation related 

10 to existing contracts that do not provide for the use 

11 of a clearly defined or practicable replacement 

12 benchmark rate. 

13 (b) PURPOSE.—It is the purpose of this Act— 

14 (1) to establish a clear and uniform process, on 

15 a nationwide basis, for replacing LIBOR in existing 

16 contracts the terms of which do not provide for the 

17 use of a clearly defined or practicable replacement 

18 benchmark rate, without affecting the ability of par19 ties to use any appropriate benchmark rate in new 

20 contracts; 

21 (2) to preclude litigation related to existing con22 tracts the terms of which do not provide for the use 

23 of a clearly defined or practicable replacement 

24 benchmark rate; 


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1 (3) to allow existing contracts that reference 

2 LIBOR but provide for the use of a clearly defined 

3 and practicable replacement rate, to operate accord4 ing to their terms; 

5 (4) to provide that modifications of existing 

6 contracts pursuant to this Act do not result in rec7 ognition of gain or loss for Federal income tax pur8 poses; 

9 (5) to provide authority to the Secretary of the 

10 Treasury to provide clear guidance regarding the 

11 Federal income tax consequences for taxpayers with 

12 respect to IBOR contracts transitioning away from 

13 IBOR to an IBOR Benchmark Replacement; and 

14 (6) to address LIBOR references in Federal 

15 law. 

16 SEC. 3. DEFINITIONS. 

17 In this Act: 

18 (1) BENCHMARK.—The term ‘‘benchmark’’ 

19 means an index of interest rates or dividend rates 

20 that is used, in whole or in part, as the basis of or 

21 as a reference for calculating or determining any 

22 valuation, payment, or other measurement. 

23 (2) BENCHMARK ADMINISTRATOR.—The term 

24 ‘‘benchmark administrator’’ means a person that 

25 publishes a benchmark for use by third parties. 


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1 (3) BENCHMARK REPLACEMENT.—The term 

2 ‘‘benchmark replacement’’ means a benchmark, or 

3 an interest rate or dividend rate (which may or may 

4 not be based in whole or in part on a prior setting 

5 of LIBOR), to replace LIBOR or any interest rate 

6 or dividend rate based on LIBOR, whether on a 

7 temporary, permanent, or indefinite basis, under or 

8 with respect to a LIBOR contract. 

9 (4) BENCHMARK REPLACEMENT CONFORMING

10 CHANGES.—The term ‘‘benchmark replacement con11 forming changes’’ means any technical, administra12 tive, or operational changes, alterations, or modifica13 tions that— 

14 (A) the Board determines, in its discretion, 

15 would address 1 or more issues affecting the 

16 implementation, administration, and calculation 

17 of the Board-selected benchmark replacement in 

18 LIBOR contracts; or 

19 (B) solely with respect to a LIBOR con20 tract that is not a consumer loan, in the rea21 sonable judgment of a calculating person, are 

22 otherwise necessary or appropriate to permit 

23 the implementation, administration, and cal24 culation of the Board-selected benchmark re25 placement under or with respect to a LIBOR 


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1 contract after giving due consideration to any 

2 benchmark replacement conforming changes 

3 under subparagraph (A). 

4 (5) BOARD.—The term ‘‘Board’’ means the 

5 Board of Governors of the Federal Reserve System. 

6 (6) BOARD-SELECTED BENCHMARK REPLACE7 MENT.—The term ‘‘Board-selected benchmark re8 placement’’ means a benchmark replacement identi9 fied by the Board that is based on SOFR, including 

10 any tenor spread adjustment pursuant to section 

11 4(e). 

12 (7) CALCULATING PERSON.—The term ‘‘calcu13 lating person’’ means, with respect to any LIBOR 

14 contract, any person, including the determining per15 son, responsible for calculating or determining any 

16 valuation, payment, or other measurement based on 

17 a benchmark. 

18 (8) CONSUMER; CREDIT.—The terms ‘‘con19 sumer’’ and ‘‘credit’’ have the meanings given the 

20 terms in section 103 of the Truth in Lending Act 

21 (15 U.S.C. 1602). 

22 (9) CONSUMER LOAN.—The term ‘‘consumer 

23 loan’’ means a consumer credit transaction. 

24 (10) DETERMINING PERSON.—The term ‘‘deter25 mining person’’ means, with respect to any LIBOR 


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1 contract, any person with the authority, right, or ob2 ligation, including on a temporary basis (as identi3 fied by the LIBOR contract or by the governing law 

4 of the LIBOR contract, as appropriate) to determine 

5 a benchmark replacement. 

6 (11) FALLBACK PROVISIONS.—The term ‘‘fall7 back provisions’’ means terms in a LIBOR contract 

8 for determining a benchmark replacement, including 

9 any terms relating to the date on which the bench10 mark replacement becomes effective. 

11 (12) IBOR.—The term ‘‘IBOR’’ means 

12 LIBOR, any tenor of non-U.S. dollar currency rates 

13 formerly known as the London interbank offered 

14 rate as administered by ICE Benchmark Adminis15 tration Limited (or any predecessor or successor ad16 ministrator thereof), and any other interbank offered 

17 rates that are expected to cease. 

18 (13) IBOR BENCHMARK REPLACEMENT.—The 

19 term ‘‘IBOR benchmark replacement’’ means a 

20 benchmark, or an interest rate or dividend rate 

21 (which may or may not be based in whole or in part 

22 on a prior setting of an IBOR), to replace an IBOR 

23 or any interest rate or dividend rate based on an 

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1 definite basis, under or with respect to an IBOR 

2 contract. 

3 (14) IBOR CONTRACT.—The term ‘‘IBOR con4 tract’’ means any contract, agreement, indenture, or5 ganizational document, guarantee, mortgage, deed of 

6 trust, lease, security (whether representing debt or 

7 equity, including any interest in a corporation, a 

8 partnership, or a limited liability company), instru9 ment, or other obligation or asset that, by its terms, 

10 continues in any way to use an IBOR as a bench11 mark. 

12 (15) LIBOR.—The term ‘‘LIBOR’’— 

13 (A) means the overnight and 1-, 3-, 6-, 

14 and 12-month tenors of U.S. dollar LIBOR 

15 (formerly known as the London interbank of16 fered rate) as administered by ICE Benchmark 

17 Administration Limited (or any predecessor or 

18 successor administrator thereof); and 

19 (B) does not include the 1-week or 2- 

20 month tenors of U.S. dollar LIBOR. 

21 (16) LIBOR CONTRACT.—The term ‘‘LIBOR 

22 contract’’ means any contract, agreement, indenture, 

23 organizational document, guarantee, mortgage, deed 

24 of trust, lease, security (whether representing debt 

25 or equity, including any interest in a corporation, a 


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1 partnership, or a limited liability company), instru2 ment, or other obligation or asset that, by its terms, 

3 uses LIBOR as a benchmark. 

4 (17) LIBOR REPLACEMENT DATE.—The term 

5 ‘‘LIBOR replacement date’’ means the first London 

6 banking day after June 30, 2023, unless the Board 

7 determines that any LIBOR tenor will cease to be 

8 published or cease to be representative on a different 

9 date. 

10 (18) SECURITY.—The term ‘‘security’’ has the 

11 meaning given the term in section 2(a) of the Secu12 rities Act of 1933 (15 U.S.C. 77b(a)). 

13 (19) SOFR.—The term ‘‘SOFR’’ means the 

14 Secured Overnight Financing Rate published by the 

15 Federal Reserve Bank of New York (or a successor 

16 administrator). 

17 (20) TENOR SPREAD ADJUSTMENT.—The term 

18 ‘‘tenor spread adjustment’’ means— 

19 (A) 0.00644 percent for overnight LIBOR; 

20 (B) 0.11448 percent for 1-month LIBOR; 

21 (C) 0.26161 percent for 3-month LIBOR; 

22 (D) 0.42826 percent for 6-month LIBOR; 

23 and 

24 (E) 0.71513 percent for 12-month LIBOR. 


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1 SEC. 4. LIBOR CONTRACTS. 

2 (a) IN GENERAL.—On the LIBOR replacement date, 

3 the Board-selected benchmark replacement shall be the 

4 benchmark replacement for any LIBOR contract that, 

5 after giving any effect to subsection (b)— 

6 (1) contains no fallback provisions; or 

7 (2) contains fallback provisions that identify 

8 neither— 

9 (A) a specific benchmark replacement; nor 

10 (B) a determining person. 

11 (b) FALLBACK PROVISIONS.—On the LIBOR re12 placement date, any reference in the fallback provisions 

13 of a LIBOR contract to— 

14 (1) a benchmark replacement that is based in 

15 any way on any LIBOR value, except to account for 

16 the difference between LIBOR and the benchmark 

17 replacement; or 

18 (2) a requirement that a person (other than a 

19 benchmark administrator) conduct a poll, survey, or 

20 inquiries for quotes or information concerning inter21 bank lending or deposit rates, 

22 shall be disregarded as if not included in the fallback pro23 visions of such LIBOR contract and shall be deemed null 

24 and void and without any force or effect. 

25 (c) AUTHORITY OF DETERMINING PERSON.— 


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1 (1) IN GENERAL.—Subject to subsection (f)(2), 

2 a determining person may select the Board-selected 

3 benchmark replacement as the benchmark replace4 ment. 

5 (2) SELECTION.—Any selection by a deter6 mining person of the Board-selected benchmark re7 placement pursuant to paragraph (1) shall be— 

8 (A) irrevocable; 

9 (B) made by the earlier of the LIBOR re10 placement date and the latest date for selecting 

11 a benchmark replacement according to the 

12 terms of the LIBOR contract; and 

13 (C) used in any determinations of the 

14 benchmark under or with respect to the LIBOR 

15 contract occurring on and after the LIBOR re16 placement date. 

17 (3) NO SELECTION.—If a determining person 

18 does not select a benchmark replacement by the date 

19 specified in paragraph (2)(B), the Board-selected 

20 benchmark replacement, on and after the LIBOR re21 placement date, shall be the benchmark replacement 

22 for the LIBOR contract. 

23 (d) CONFORMING CHANGES.— 

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1 ment for a LIBOR contract pursuant to subsection 

2 (a) or (c), all benchmark replacement conforming 

3 changes shall become an integral part of the LIBOR 

4 contract. 

5 (2) NO CONSENT REQUIRED.—A calculating 

6 person shall not be required to obtain consent from 

7 any other person prior to the adoption of benchmark 

8 replacement conforming changes. 

9 (e) ADJUSTMENT BY BOARD.— 

10 (1) IN GENERAL.—Except as provided in para11 graph (2), on the LIBOR replacement date, the 

12 Board shall adjust the Board-selected benchmark re13 placement for each category of LIBOR contract that 

14 the Board may identify to include the relevant tenor 

15 spread adjustment. 

16 (2) CONSUMER LOANS.—For LIBOR contracts 

17 that are consumer loans, the Board shall adjust the 

18 Board-selected benchmark replacement as follows: 

19 (A) During the 1-year period beginning on 

20 the LIBOR replacement date, incorporate an 

21 amount, to be determined for any business day 

22 during that period, that transitions linearly 

23 from the difference between the Board-selected 

24 benchmark replacement and the corresponding 

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1 diately before the LIBOR replacement date to 

2 the relevant tenor spread adjustment. 

3 (B) On and after the date that is 1 year 

4 after the LIBOR replacement date, incorporate 

5 the relevant tenor spread adjustment. 

6 (f) RULE OF CONSTRUCTION.—Nothing in this Act 

7 may be construed to alter or impair— 

8 (1) any written agreement specifying that a 

9 LIBOR contract shall not be subject to this Act; 

10 (2) except as provided in subsection (b), any 

11 LIBOR contract that contains fallback provisions 

12 that identify a benchmark replacement that is not 

13 based in any way on any LIBOR value (including 

14 the prime rate or the effective Federal funds rate); 

15 (3) except as provided in subsection (b) or 

16 (c)(3), any LIBOR contract subject to subsection 

17 (c)(1) as to which a determining person does not 

18 elect to use a Board-selected benchmark replacement 

19 pursuant to that subsection; 

20 (4) the application to a Board-selected bench21 mark replacement of any cap, floor, modifier, or 

22 spread adjustment to which LIBOR had been sub23 ject pursuant to the terms of a LIBOR contract; 

24 (5) any provision of Federal consumer financial 

25 law that— 


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1 (A) requires creditors to notify borrowers 

2 regarding a change-in-terms; or 

3 (B) governs the reevaluation of rate in4 creases on credit card accounts under open5 ended (not home-secured) consumer credit 

6 plans; or 

7 (6) except as provided in section 5(c), the rights 

8 or obligations of any person, or the authorities of 

9 any agency, under Federal consumer financial law, 

10 as defined in section 1002 of the Consumer Finan11 cial Protection Act of 2010 (12 U.S.C. 5481). 

12 SEC. 5. CONTINUITY OF CONTRACT AND SAFE HARBOR. 

13 (a) IN GENERAL.—A Board-selected benchmark re14 placement and the selection or use of a Board-selected 

15 benchmark replacement as a benchmark replacement 

16 under or with respect to a LIBOR contract, and any 

17 benchmark replacement conforming changes, shall con18 stitute— 

19 (1) a commercially reasonable replacement for 

20 and a commercially substantial equivalent to 

21 LIBOR; 

22 (2) a reasonable, comparable, or analogous rate, 

23 index, or term for LIBOR; 


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1 (3) a replacement that is based on a method2 ology or information that is similar or comparable to 

3 LIBOR; 

4 (4) substantial performance by any person of 

5 any right or obligation relating to or based on 

6 LIBOR; and 

7 (5) a replacement that has historical fluctua8 tions that are substantially similar to those of 

9 LIBOR for purposes of the Truth in Lending Act 

10 (15 U.S.C. 1601 note) and regulations promulgated 

11 under that Act. 

12 (b) NO IMPAIRMENT.—Neither the selection or use 

13 of a Board-selected benchmark replacement as a bench14 mark replacement nor the determination, implementation, 

15 or performance of benchmark replacement conforming 

16 changes under section 4 may— 

17 (1) be deemed to impair or affect the right of 

18 any person to receive a payment, or to affect the 

19 amount or timing of such payment, under any 

20 LIBOR contract; or 

21 (2) have the effect of— 

22 (A) discharging or excusing performance 

23 under any LIBOR contract for any reason, 

24 claim, or defense (including any force majeure 

25 or other provision in any LIBOR contract); 


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1 (B) giving any person the right to unilater2 ally terminate or suspend performance under 

3 any LIBOR contract; 

4 (C) constituting a breach of any LIBOR 

5 contract; or 

6 (D) voiding or nullifying any LIBOR con7 tract. 

8 (c) SAFE HARBOR.—No person shall be subject to 

9 any claim or cause of action in law or equity or request 

10 for equitable relief, or have liability for damages, arising 

11 out of— 

12 (1) the selection or use of a Board-selected 

13 benchmark replacement; 

14 (2) the implementation of benchmark replace15 ment conforming changes; or 

16 (3) with respect to a LIBOR contract that is 

17 not a consumer loan, the determination of bench18 mark replacement conforming changes, 

19 in each case after giving effect to the provisions of section 

20 4; provided, however, that in each case any person (includ21 ing a calculating person) shall remain subject to the terms 

22 of a LIBOR contract that are not affected by this Act 

23 and any existing legal, regulatory, or contractual obliga24 tions to correct servicing or other ministerial errors under 

25 or with respect to a LIBOR contract. 


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1 (d) SELECTION.—The selection or use of a Board2 selected benchmark replacement or the determination, im3 plementation, or performance of benchmark replacement 

4 conforming changes under section 4 shall not be deemed 

5 to— 

6 (1) be an amendment or modification of any 

7 LIBOR contract; or 

8 (2) prejudice, impair, or affect the rights, inter9 ests, or obligations of any person under or with re10 spect to any LIBOR contract. 

11 (e) NO NEGATIVE INFERENCE.—Except as provided 

12 in subsection (a), (b), or (c)(1) of section 4, nothing in 

13 this Act may be construed to create any negative inference 

14 or negative presumption regarding the validity or enforce15 ability of— 

16 (1) any benchmark replacement (including any 

17 method for calculating, determining, or imple18 menting an adjustment to the benchmark replace19 ment to account for any historical differences be20 tween LIBOR and the benchmark replacement) that 

21 is not a Board-selected benchmark replacement; or 

22 (2) any changes, alterations, or modifications to 

23 or with respect to a LIBOR contract that are not 

24 benchmark replacement conforming changes. 


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1 SEC. 6. TAX TREATMENT AND TAX REGULATIONS FOR 

2 LIBOR TRANSITION. 

3 (a) IN GENERAL.—None of— 

4 (1) the selection or use of a Board-selected 

5 benchmark replacement as a benchmark replace6 ment, 

7 (2) the determination, implementation, or per8 formance of benchmark replacement conforming 

9 changes, or 

10 (3) the application to any LIBOR contract of, 

11 or the agreement by parties thereto to terms con12 sistent with, section 4, 

13 shall be treated as a sale, exchange, or other disposition 

14 of property for purposes of section 1001 of the Internal 

15 Revenue Code of 1986. 

16 (b) GUIDANCE.—The Secretary of the Treasury (or 

17 the Secretary’s delegate) shall issue such regulations or 

18 other guidance as may be necessary or appropriate to 

19 carry out subsection (a) and address the Federal income 

20 tax consequences for taxpayers with respect to IBOR con21 tracts transitioning away from IBOR to an IBOR bench22 mark replacement. 

23 SEC. 7. BENCHMARK FOR LOANS. 

24 (a) DEFINITIONS.—In this section: 


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1 (1) BANK.—The term ‘‘bank’’ means an insti2 tution subject to examination by a Federal financial 

3 institutions regulatory agency. 

4 (2) COVERED ACTION.—The term ‘‘covered ac5 tion’’ means— 

6 (A) the initiation by a Federal supervisory 

7 agency of an enforcement action, including the 

8 issuance of a cease-and-desist order; or 

9 (B) the issuance by a Federal supervisory 

10 agency of a matter requiring attention, a mat11 ter requiring immediate attention; or a matter 

12 requiring board attention resulting from a su13 pervisory activity conducted by the Federal su14 pervisory agency. 

15 (3) FEDERAL FINANCIAL INSTITUTIONS REGU16 LATORY AGENCY.—The term ‘‘Federal financial in17 stitutions regulatory agencies’’ has the meaning 

18 given the term in section 1003 of the Federal Finan19 cial Institutions Examination Council Act of 1978 

20 (12 U.S.C. 3302). 

21 (4) FEDERAL SUPERVISORY AGENCY.—The 

22 term ‘‘Federal supervisory agency’’ means an agency 

23 listed in subparagraphs (A) through (H) of section 

24 1101(7) of the Right to Financial Privacy Act of 

25 1978 (12 U.S.C. 3401(7)). 


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1 (5) NON-IBOR LOAN.—The term ‘‘non-IBOR 

2 loan’’ means any loan that, by its terms, does not 

3 use in any way LIBOR, any tenor of non-U.S. dollar 

4 currency rates formerly known as the London inter5 bank offered rate as administered by ICE Bench6 mark Administration Limited (or any predecessor or 

7 successor administrator thereof), and any other 

8 interbank offered rates that are expected to cease, as 

9 a benchmark. 

10 (b) BENCHMARKS USED BY BANKS.—With respect to 

11 a benchmark used by a bank— 

12 (1) the bank, in any non-IBOR loan made be13 fore, on, or after the date of enactment of this Act, 

14 may use any benchmark, including a benchmark 

15 that is not SOFR, that the bank determines to be 

16 appropriate for the funding model of the bank; the 

17 needs of the customers of the bank; and the prod18 ucts, risk profile, risk management capabilities, and 

19 operational capabilities of the bank; provided, how20 ever, that the use of any benchmark shall remain 

21 subject to the terms of the non-IBOR loan, and ap22 plicable law; and 

23 (2) no Federal supervisory agency may take 

24 any covered action against the bank solely because 

25 that benchmark is not SOFR. 


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1 SEC. 8. PREEMPTION. 

2 This Act, and regulations promulgated under this 

3 Act, shall supersede any provision of any State or local 

4 law, statute, rule, regulation, or standard— 

5 (1) relating to the selection or use of a bench6 mark replacement or related conforming changes; or 

7 (2) expressly limiting the manner of calculating 

8 interest, including the compounding of interest, as 

9 that provision applies to the selection or use of a 

10 Board-selected benchmark replacement or bench11 mark replacement conforming changes. 

12 SEC. 9. TRUST INDENTURE ACT OF 1939. 

13 Section 316(b) of the Trust Indenture Act of 1939 

14 (15 U.S.C. 77ppp(b)) is amended— 

15 (1) by striking ‘‘, except as’’ and inserting ‘‘, 

16 except— 

17 ‘‘(1) as’’; 

18 (2) in paragraph (1), as so designated, by strik19 ing ‘‘(a), and except that’’ and inserting ‘‘(a); 

20 ‘‘(2) that’’; 

21 (3) in paragraph (2), as so designated, by strik22 ing the period at the end and inserting ‘‘; and’’; and 

23 (4) by adding at the end the following: 

24 ‘‘(3) that the right of any holder of any inden25 ture security to receive payment of the principal of 

26 and interest on such indenture security shall not be 


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1 deemed to be impaired or affected by any change oc2 curring by the application of section 4 of the Eco3 nomic Continuity and Stability Act to any indenture 

4 security.’’. 

5 SEC. 10. AMENDMENT TO THE HIGHER EDUCATION ACT OF 

6 1965. 

7 Section 438(b)(2)(I) of the Higher Education Act of 

8 1965 (20 U.S.C. 1087–1(b)(2)(I)) is amended by adding 

9 at the end the following: 

10 ‘‘(viii) REVISED CALCULATION RULE

11 TO ADDRESS INSTANCES WHERE 1-MONTH

12 USD LIBOR CEASES OR IS NON-REP13 RESENTATIVE.— 

14 ‘‘(I) SUBSTITUTE REFERENCE

15 INDEX.—The provisions of this clause 

16 apply to loans for which the special al17 lowance payment would otherwise be 

18 calculated pursuant to clause (vii). 

19 ‘‘(II) CALCULATION BASED ON

20 SOFR.—For loans described in sub21 clause (III) or (IV), the special allow22 ance payment described in this sub23 clause shall be substituted for the 

24 payment provided under clause (vii). 

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1 mula for computing the special allow2 ance that would otherwise apply under 

3 clause (vii) shall be revised by sub4 stituting ‘of the quotes of the 30-day 

5 Average Secured Overnight Financing 

6 Rate (SOFR) in effect for each of the 

7 days in such quarter as published by 

8 the Federal Reserve Bank of New 

9 York (or a successor administrator), 

10 adjusted daily by adding the tenor 

11 spread adjustment, as that term is de12 fined in the Economic Continuity and 

13 Stability Act, for 1-month LIBOR 

14 contracts of 0.11448 percent’ for ‘of 

15 the 1-month London Inter Bank Of16 fered Rate (LIBOR) for United 

17 States dollars in effect for each of the 

18 days in such quarter as compiled and 

19 released by the British Bankers Asso20 ciation’. The special allowance calcula21 tion for loans subject to clause (vii) 

22 shall otherwise remain in effect. 

23 ‘‘(III) LOANS ELIGIBLE FOR

24 SOFR-BASED CALCULATION.—Except 

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1 cial allowance payment calculated 

2 under subclause (II) shall apply to all 

3 loans for which the holder (or, if the 

4 holder acts as an eligible lender trust5 ee for the beneficial owner of the loan, 

6 the beneficial owner of the loan) at 

7 any time after the effective date of 

8 this clause notifies the Secretary that 

9 the holder or beneficial owner affirma10 tively and permanently elects to waive 

11 all contractual, statutory, or other 

12 legal rights to a special allowance paid 

13 under clause (vii) or to the special al14 lowance paid pursuant to any other 

15 formula that was previously in effect 

16 with respect to such loan, and accepts 

17 the rate described in subclause (II). 

18 Any such waiver shall apply to all 

19 loans then held, or to be held from 

20 time to time, by such holder or bene21 ficial owner; provided that, due to the 

22 need to obtain the approval of, dem23 onstrated to the satisfaction of the 

24 Secretary— 


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1 ‘‘(aa) one or more third par2 ties with a legal or beneficial in3 terest in loans eligible for the 

4 SOFR-based calculation; or 

5 ‘‘(bb) a nationally recog6 nized rating organization assign7 ing a rating to a financing se8 cured by loans otherwise eligible 

9 for the SOFR-based calculation, 

10 the holder of the loan (or, if the hold11 er acts as an eligible lender trustee 

12 for the beneficial owner of the loan, 

13 the beneficial owner of the loan) may 

14 elect to apply the rate described in 

15 subclause (II) to specified loan port16 folios established for financing pur17 poses by separate notices with dif18 ferent effective dates. The special al19 lowance rate based on SOFR shall be 

20 effective with respect to a portfolio as 

21 of the first day of the calendar quar22 ter following the applicable effective 

23 date of the waiver received by the Sec24 retary from the holder or beneficial 

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1 revocably continue for all subsequent 

2 quarters. 

3 ‘‘(IV) FALLBACK PROVISIONS.— 

4 ‘‘(aa) In the event that a 

5 holder or beneficial owner has 

6 not elected to waive its rights to 

7 a special allowance payment 

8 under clause (vii) with respect to 

9 a portfolio with an effective date 

10 of the waiver prior to the first 

11 of— 

12 ‘‘(AA) the date on 

13 which the ICE Benchmark 

14 Administration (‘IBA’) has 

15 permanently or indefinitely 

16 stopped providing the 1- 

17 month United States Dollar 

18 LIBOR (‘1-month USD 

19 LIBOR’) to the general pub20 lic; 

21 ‘‘(BB) the effective 

22 date of an official public 

23 statement by the IBA or its 

24 regulator that the 1-month 

25 USD LIBOR is no longer 


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26 

•S 3844 IS

1 reliable or no longer rep2 resentative; or 

3 ‘‘(CC) the LIBOR re4 placement date, as defined 

5 in section 3 of the Economic 

6 Continuity and Stability Act, 

7 the special allowance rate calcula8 tion as described in subclause 

9 (II) shall, by operation of law, 

10 apply to all loans in such port11 folio. 

12 ‘‘(bb) In such event— 

13 ‘‘(AA) the last deter14 mined rate of special allow15 ance based on 1-month USD 

16 LIBOR will continue to 

17 apply until the end of the 

18 then current calendar quar19 ter; and 

20 ‘‘(BB) the special al21 lowance rate calculation as 

22 described in subclause (II) 

23 shall become effective as of 

24 the first day of the following 

25 calendar quarter and remain 


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27 

•S 3844 IS

1 in effect for all subsequent 

2 calendar quarters.’’. 

3 SEC. 11. RULEMAKING. 

4 Not later than 180 days after the date of enactment 

5 of this Act, the Board shall promulgate regulations to 

6 carry out this Act. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS