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Your Transition from the LIBOR Index

As we reviewed in this publication last June, it still stands that the LIBOR Index will no longer be available after 2021.

As the transition remains a global priority, the Federal Security Board (FSB) published a progress report and provided a roadmap of milestones that you should follow to navigate this process in a timely manner. You can find this publication under “” or you can find under just “”.

After 3 decades, it was determined that LIBOR was vulnerable to interest rate manipulation. Because of this, it was announced that this benchmark rate would be discontinued beginning December 31, 2021.

Drafting and Maintaining Effective Institution Policies

The 7 Best Practices for Drafting Effective Policies

1. Use plain English:
– All financial institutions staff should be able to understand and implement the policy, so keep it simple.

2. Tailor Policies to your Institution:
– Include in your policies the ‘secret sauce’ that highlights your institutions differences.

3. Keep them Brief:
– Your policies should be concise so that the important components are not obscured.

4. Create a Culture of Compliance:
– Policies can assist in creating a culture of compliance.

5. Stay up to Date:
– Policies need to convey the current governance body. They should be reviewed and updated at least annually.

6. Content is Key:
– Include a Policy Statement, Specific Goals, Oversight Authority, Exceptions, and the Impacted Business Unit.

7. Establish Accountability:
– Accountability is the bedrock of an effective policy. Name who is responsible for implementing and acting as the policy lead.

Reference: ABA Bank Compliance / March – April 2021 / Perspective by Michael Berman / Pages 34-35

Regulatory Question and Answer

Question: Regulations During Emergency Procedures

May a Branch post a general notice regarding the Regulation CC exceptions to the fund’s availability schedule in the event of an emergency?

Answer: Regulation CC requires financial institutions to provide notices about an exception hold based on emergency conditions in a “reasonable form and within a reasonable time given the circumstances.”

Comment 4a to that section offers the example of a bank experiencing a weather or power outage emergency that affects its own operation, in which case “it may be reasonable for the depositary bank to provide a general notice to all depositors via posting at branches and ATM’s, or through other forms of media.”

No notice is required if the funds subject to the exception become available before the notice must be sent.