Beaumont Quoted in Wall Street Journal’s Coverage of the Main Street Lending Program
In a recent Wall Street Journal article, Friedman Kaplan litigation partner and leader of its LIBOR Transition Task Force Anne Beaumont discussed the impact of the Federal Reserve's decision to abandon a requirement that loans issued under the Main Street Lending Program use the Secured Overnight Financing Rate (SOFR) to set the rate of interest. SOFR is the Fed's chosen replacement rate for LIBOR, which is set to be discontinued at the end of 2021. Securing widespread adoption of SOFR has been challenging thus far, and some lenders resisted adding what they view as additional complexity to the stimulus program for small and midsize businesses. On April 30th, the Fed announced that rather than requiring loans under the Main Street Lending Program to use SOFR, loan contracts will need to include fallback language specifying what happens upon LIBOR's expiration.
Regarding the Fed’s decision, Ms. Beaumont told the Wall Street Journal, "They’ve blown the opportunity for institutions that do have the ability to use SOFR to test drive their systems." She also noted that the Fed lost the chance to reduce the amount of new LIBOR-based debt that is accumulating ahead of the LIBOR transition deadline, stating, "You don’t want to add more rocks to the pile."
The full Wall Street Journal article is available here.