Our Position

LIBOR Transition


  • ICBA supports the Paced Transition Plan of the Alternative Reference Rate Committee (ARRC) to transition the banking industry away from the London Inter-bank Offered Rate (LIBOR).

  • ICBA recognizes the advantages of the Secured Overnight Financing Rate (SOFR) but has ongoing concerns about its effect on community banks.

  • ICBA encourages all community banks to review their LIBOR-based instruments and contracts to ensure that they include adequate fallback language and an alternative reference rate contingent on the discontinuance of LIBOR.

  • ICBA calls upon the ARRC and prudential banking regulators to ensure that the integrity of current community bank financial contracts is not harmed by a transition to SOFR and that community banks and their customers are not adversely impacted by any transition.

  • ICBA supports recently introduced legislation to resolve legacy LIBOR contracts that cannot clearly be transitioned to SOFR or an alternative reference rate.


There is an estimated $200 trillion in financial contracts referencing USD LIBOR that could be adversely impacted if LIBOR is discontinued in 2021. ICBA has served as a member of ARRC since 2018 and supports the Committee’s Paced Transition Plan for transitioning the industry away from LIBOR.

ICBA also supports the development of an alternative reference rate. One such possibility is the Secured Overnight Financing Rate (SOFR), which has many advantages. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. Transaction volumes underlying SOFR, averaging over $1 trillion of daily trading, are far larger than the transactions in any other U.S. money market and dwarf the volumes underlying LIBOR.

Despite these advantages, ICBA has concerns that SOFR will not consistently and accurately reflect the costs of all types of lending, particularly unsecured lending. The ARRC should ensure that smaller financial institutions are not ignored in the transition from LIBOR to SOFR by playing close attention to the interests of community banks and their contractual relationships with customers. Neither community banks nor their small business customers should be penalized through a forced contractual modification.

ICBA is encouraging all community banks to review their LIBOR based instruments and contracts and amend them to provide for adequate fallback language and an alternative reference rate contingent on the discontinuance of LIBOR. The ARRC has been providing recommended language to amend cash and derivative instruments, and the Federal Reserve Bank of New York, the administrator and producer of SOFR, is now publishing SOFR rates and plans to publish compound averages of SOFR so that term rates can be utilized.

ICBA supports recent legislation (H.R. 4616, The Adjustable Interest Rate (LIBOR) Act) introduced in Congress to remedy legacy contracts that cannot be efficiently transitioned away from LIBOR as a reference rate. ICBA believes that a robust solution is needed to address existing LIBOR contracts that do not have a workable fallback provision in the event that LIBOR cannot be relied upon as a legal reference rate.

Staff Contacts: Chris Cole and James Kendrick

Staff Contacts

Christopher Cole

EVP, Senior Regulatory Counsel


[email protected]

James Kendrick

First VP, Accounting and Capital Policy


[email protected]