Jesse Hamilton, Alex Harris, and Christopher Condon, 11 June 2021
Wall Street banks must speed up their efforts to stop using Libor, regulators said Friday, issuing one of their sternest warnings yet about abandoning the scandal-plagued benchmark.
From Treasury Secretary Janet Yellen to Federal Reserve Chairman Jerome Powell, watchdogs made clear during a meeting of the Financial Stability Oversight Council that time is running out. The admonishment — coming from the heads of all of the U.S.’s most powerful financial agencies — marked a remarkably high-profile push to light a fire under banks including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc.
“The deniers and laggards are engaging in magical thinking,” said Randal Quarles, the Fed’s vice chairman for supervision. “Libor is over.”
Transitioning away from the foundational reference rate has been a costly ordeal because Libor has long been at the heart of so many transactions, from home mortgages to complex derivatives contracts. Global regulators have repeatedly cautioned that 2021 is the benchmark’s wind-down year and are pushing market participants toward alternatives such as the Secured Overnight Financing Rate.