Interest rates

Members of the Financial Stability Oversight Council are trying to light a fire under banks to adopt an alternative to the foundational reference rate.

The pace of the U.S. recovery picked up somewhat in the past two months, sparking price pressures as businesses contended with worker scarcity and rising costs, the Federal Reserve said.

Rising inflation could lead to a rate hike, bolstering lenders' profits in 2022. Improved credit quality and an economic rebound are also fueling investment in the sector.

There’s so much spare cash sloshing around U.S. funding markets that investors are choosing to park almost half a trillion dollars at the central bank — earning absolutely nothing.

Federal Reserve Vice Chair Randal Quarles has made it clear that banks failing to make the transition away from the benchmark rate could face supervisory consequences.

Bank of America and JPMorgan Chase struck the first swaps trade tied to the Bloomberg Short Term Bank Yield index Friday, as Wall Street tests new benchmarks meant to help replace Libor.

Zions Bancorp. CEO Harris Simmons says the Secured Overnight Financing Rate is more suited for derivative traders than regional banks as a replacement for Libor. His bank this week became the largest to say it would use the alternative developed by the American Financial Exchange.

Starting Thursday, firms should stop issuing new loans, bonds and securitizations tied to the discredited benchmark, according to the Bank of England.

Legacy contracts using the London interbank offered rate — which is set to be phased out at the end of this year — were granted a reprieve to mid-2023. However, there is no wiggle room on when the rate will expire for new deals, said Federal Reserve Vice Chairman Randal Quarles.

Under a proposed rule change, credit unions would no longer need to seek pre-approval from the regulator before entering into interest rate swaps, speeding up transactions for some of the industry’s biggest institutions that already hold over 80% of total assets.