CFPB Adopts LIBOR Transition Interim Final Rule

The CFPB adopted an interim final rule amending Regulation Z ("Truth in Lending") to facilitate the transition from LIBOR and reflect the enactment of the Adjustable Interest Rate (LIBOR) Act (see prior coverage) and related Federal Reserve Board ("FRB") actions taken thereunder, i.e., the adoption of Regulation ZZ ("Regulations Implementing the Adjustable Interest Rate")(see prior coverage).

The CFPB previously adopted amendments to Regulations Z "to address the anticipated sunset of LIBOR" in December of 2021. The amendments served to aid the transition away from LIBOR indices that are used by some creditors as an index for calculating rates for either open-end or closed-end products.

The interim final rule conforms the terminology of Regulation Z with the LIBOR Act and adds references to the Secured Overnight Financing Rate ("SOFR"), or SOFR-based index, selected by the FRB for the 12-month tenor of U.S. Dollar LIBOR.

The interim final rule will be effective on May 15, 2023. Comments are due 30 days after publication in the Federal Register.