12 U.S.C. § 5802 — Definitions

Page 2023 TITLE 12—BANKS AND BANKING § 5802 (2) Sex offense certification With respect to funds received by a partici- pating State under the Program, any private entity that receives a loan, a loan guarantee, or other financial assistance using such funds after March 11, 2021, shall certify to the par- ticipating State that the principals of such en- tity have not been convicted of a sex offense against a minor (as such terms are defined in section 20911 of title 34). (c) Prohibition on pornography None of the funds made available under this chapter may be used to pay the salary of any in- dividual engaged in activities related to the Pro- gram who has been officially disciplined for vio- lations of subpart G of the Standards of Ethical Conduct for Employees of the Executive Branch for viewing, downloading, or exchanging pornog- raphy, including child pornography, on a Fed- eral Government computer or while performing official Federal Government duties. (Pub. L. 111–240, title III, § 3011, Sept. 27, 2010, 124 Stat. 2581; Pub. L. 113–188, title IX, § 901(d), Nov. 26, 2014, 128 Stat. 2020; Pub. L. 117–2, title III, § 3301(a)(1)(G), Mar. 11, 2021, 135 Stat. 69.) Editorial Notes AMENDMENTS 2021—Subsec. (b). Pub. L. 117–2 substituted ‘‘March 11, 2021’’ for ‘‘September 27, 2010’’ in pars. (1) and (2). 2014—Subsecs. (b) to (d). Pub. L. 113–188 redesignated subsecs. (c) and (d) as (b) and (c), respectively, and struck out former subsec. (b). Prior to amendment, text of subsec. (b) read as follows: ‘‘The Comptroller General of the United States shall perform an annual audit of the Program and issue a report to the appropriate com- mittees of Congress containing the results of such audit.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117–2 applicable with respect to funds appropriated under section 3301 of Pub. L. 117–2 and funds appropriated on and after Mar. 11, 2021, see section 3301(g) of Pub. L. 117–2, set out as a note under section 5701 of this title. CHAPTER 55—ADJUSTABLE INTEREST RATE (LIBOR) Sec. 5801. Findings and purpose. 5802. Definitions. 5803. LIBOR contracts. 5804. Continuity of contract and safe harbor. 5805. Benchmark for loans. 5806. Preemption. 5807. Rulemaking. § 5801. Findings and purpose (a) Findings Congress finds that— (1) LIBOR is used as a benchmark rate in more than $200,000,000,000,000 worth of con- tracts worldwide; (2) a significant number of existing con- tracts that reference LIBOR do not provide for the use of a clearly defined or practicable re- placement benchmark rate when LIBOR is dis- continued; and (3) the cessation or nonrepresentativeness of LIBOR could result in disruptive litigation re- lated to existing contracts that do not provide for the use of a clearly defined or practicable replacement benchmark rate. (b) Purpose It is the purpose of this chapter— (1) to establish a clear and uniform process, on a nationwide basis, for replacing LIBOR in existing contracts the terms of which do not provide for the use of a clearly defined or prac- ticable replacement benchmark rate, without affecting the ability of parties to use any ap- propriate benchmark rate in new contracts; (2) to preclude litigation related to existing contracts the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate; (3) to allow existing contracts that reference LIBOR but provide for the use of a clearly de- fined and practicable replacement rate, to op- erate according to their terms; and (4) to address LIBOR references in Federal law. (Pub. L. 117–103, div. U, § 102, Mar. 15, 2022, 136 Stat. 825.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (b), was in the original ‘‘this division’’, meaning div. U of Pub. L. 117–103, Mar. 15, 2022, 136 Stat. 825, known as the Adjust- able Interest Rate (LIBOR) Act, which is classified principally to this chapter. For complete classification of div. U to the Code, see Short Title note set out below and Tables. Statutory Notes and Related Subsidiaries SHORT TITLE Pub. L. 117–103, div. U, § 101, Mar. 15, 2022, 136 Stat. 825, provided that: ‘‘This division [enacting this chapter and amending section 77ppp of Title 15, Commerce and Trade, and section 1087–1 of Title 20, Education] may be cited as the ‘Adjustable Interest Rate (LIBOR) Act’.’’ § 5802. Definitions In this chapter: (1) Benchmark The term ‘‘benchmark’’ means an index of interest rates or dividend rates that is used, in whole or in part, as the basis of or as a ref- erence for calculating or determining any valuation, payment, or other measurement. (2) Benchmark administrator The term ‘‘benchmark administrator’’ means a person that publishes a benchmark for use by third parties. (3) Benchmark replacement The term ‘‘benchmark replacement’’ means a benchmark, or an interest rate or dividend rate (which may or may not be based in whole or in part on a prior setting of LIBOR), to re- place LIBOR or any interest rate or dividend rate based on LIBOR, whether on a temporary, permanent, or indefinite basis, under or with respect to a LIBOR contract. Page 2024 TITLE 12—BANKS AND BANKING § 5802 (4) Benchmark replacement conforming changes The term ‘‘benchmark replacement con- forming changes’’ means any technical, ad- ministrative, or operational changes, alter- ations, or modifications that— (A) the Board determines, in its discretion, would address 1 or more issues affecting the implementation, administration, and cal- culation of the Board-selected benchmark replacement in LIBOR contracts; or (B) solely with respect to a LIBOR con- tract that is not a consumer loan, in the rea- sonable judgment of a calculating person, are otherwise necessary or appropriate to permit the implementation, administration, and calculation of the Board-selected bench- mark replacement under or with respect to a LIBOR contract after giving due consider- ation to any benchmark replacement con- forming changes under subparagraph (A). (5) Board The term ‘‘Board’’ means the Board of Gov- ernors of the Federal Reserve System. (6) Board-selected benchmark replacement The term ‘‘Board-selected benchmark re- placement’’ means a benchmark replacement identified by the Board that is based on SOFR, including any tenor spread adjustment pursu- ant to section 5803(e) of this title. (7) Calculating person The term ‘‘calculating person’’ means, with respect to any LIBOR contract, any person, in- cluding the determining person, responsible for calculating or determining any valuation, payment, or other measurement based on a benchmark. (8) Consumer; credit The terms ‘‘consumer’’ and ‘‘credit’’ have the meanings given the terms in section 1602 of title 15. (9) Consumer loan The term ‘‘consumer loan’’ means a con- sumer credit transaction. (10) Determining person The term ‘‘determining person’’ means, with respect to any LIBOR contract, any person with the authority, right, or obligation, in- cluding on a temporary basis (as identified by the LIBOR contract or by the governing law of the LIBOR contract, as appropriate) to deter- mine a benchmark replacement. (11) Fallback provisions The term ‘‘fallback provisions’’ means terms in a LIBOR contract for determining a bench- mark replacement, including any terms relat- ing to the date on which the benchmark re- placement becomes effective. (12) IBOR The term ‘‘IBOR’’ means LIBOR, any tenor of non-U.S. dollar currency rates formerly known as the London interbank offered rate as administered by ICE Benchmark Administra- tion Limited (or any predecessor or successor administrator thereof), and any other inter- bank offered rates that are expected to cease. (13) IBOR benchmark replacement The term ‘‘IBOR benchmark replacement’’ means a benchmark, or an interest rate or div- idend rate (which may or may not be based in whole or in part on a prior setting of an IBOR), to replace an IBOR or any interest rate or dividend rate based on an IBOR, whether on a temporary, permanent, or indefinite basis, under or with respect to an IBOR contract. (14) IBOR contract The term ‘‘IBOR contract’’ means any con- tract, agreement, indenture, organizational document, guarantee, mortgage, deed of trust, lease, security (whether representing debt or equity, including any interest in a corpora- tion, a partnership, or a limited liability com- pany), instrument, or other obligation or asset that, by its terms, continues in any way to use an IBOR as a benchmark. (15) LIBOR The term ‘‘LIBOR’’— (A) means the overnight and 1-, 3-, 6-, and 12-month tenors of U.S. dollar LIBOR (for- merly known as the London interbank of- fered rate) as administered by ICE Bench- mark Administration Limited (or any prede- cessor or successor administrator thereof); and (B) does not include the 1-week or 2-month tenors of U.S. dollar LIBOR. (16) LIBOR contract The term ‘‘LIBOR contract’’ means any con- tract, agreement, indenture, organizational document, guarantee, mortgage, deed of trust, lease, security (whether representing debt or equity, including any interest in a corpora- tion, a partnership, or a limited liability com- pany), instrument, or other obligation or asset that, by its terms, uses LIBOR as a bench- mark. (17) LIBOR replacement date The term ‘‘LIBOR replacement date’’ means the first London banking day after June 30, 2023, unless the Board determines that any LIBOR tenor will cease to be published or cease to be representative on a different date. (18) Security The term ‘‘security’’ has the meaning given the term in section 77b(a) of title 15. (19) SOFR The term ‘‘SOFR’’ means the Secured Over- night Financing Rate published by the Federal Reserve Bank of New York (or a successor ad- ministrator). (20) Tenor spread adjustment The term ‘‘tenor spread adjustment’’ means— (A) 0.00644 percent for overnight LIBOR; (B) 0.11448 percent for 1-month LIBOR; (C) 0.26161 percent for 3-month LIBOR; (D) 0.42826 percent for 6-month LIBOR; and (E) 0.71513 percent for 12-month LIBOR. (Pub. L. 117–103, div. U, § 103, Mar. 15, 2022, 136 Stat. 826.) Page 2025 TITLE 12—BANKS AND BANKING § 5803 Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this division’’, meaning div. U of Pub. L. 117–103, Mar. 15, 2022, 136 Stat. 825, known as the Adjustable Interest Rate (LIBOR) Act, which is classified principally to this chapter. For complete classification of div. U to the Code, see Short Title note set out under section 5801 of this title and Tables. § 5803. LIBOR contracts (a) In general On the LIBOR replacement date, the Board-se- lected benchmark replacement shall be the benchmark replacement for any LIBOR contract that, after giving any effect to subsection (b)— (1) contains no fallback provisions; or (2) contains fallback provisions that identify neither— (A) a specific benchmark replacement; nor (B) a determining person. (b) Fallback provisions On the LIBOR replacement date, any reference in the fallback provisions of a LIBOR contract to— (1) a benchmark replacement that is based in any way on any LIBOR value, except to ac- count for the difference between LIBOR and the benchmark replacement; or (2) a requirement that a person (other than a benchmark administrator) conduct a poll, survey, or inquiries for quotes or information concerning interbank lending or deposit rates; shall be disregarded as if not included in the fallback provisions of such LIBOR contract and shall be deemed null and void and without any force or effect. (c) Authority of determining person (1) In general Subject to subsection (f)(2), a determining person may select the Board-selected bench- mark replacement as the benchmark replace- ment. (2) Selection Any selection by a determining person of the Board-selected benchmark replacement pursu- ant to paragraph (1) shall be— (A) irrevocable; (B) made by the earlier of the LIBOR re- placement date and the latest date for se- lecting a benchmark replacement according to the terms of the LIBOR contract; and (C) used in any determinations of the benchmark under or with respect to the LIBOR contract occurring on and after the LIBOR replacement date. (3) No selection If a determining person does not select a benchmark replacement by the date specified in paragraph (2)(B), the Board-selected bench- mark replacement, on and after the LIBOR re- placement date, shall be the benchmark re- placement for the LIBOR contract. (d) Conforming changes (1) In general If the Board-selected benchmark replace- ment becomes the benchmark replacement for a LIBOR contract pursuant to subsection (a) or (c), all benchmark replacement conforming changes shall become an integral part of the LIBOR contract. (2) No consent required A calculating person shall not be required to obtain consent from any other person prior to the adoption of benchmark replacement con- forming changes. (e) Adjustment by Board (1) In general Except as provided in paragraph (2), on the LIBOR replacement date, the Board shall ad- just the Board-selected benchmark replace- ment for each category of LIBOR contract that the Board may identify to include the rel- evant tenor spread adjustment. (2) Consumer loans For LIBOR contracts that are consumer loans, the Board shall adjust the Board-se- lected benchmark replacement as follows: (A) During the 1-year period beginning on the LIBOR replacement date, incorporate an amount, to be determined for any business day during that period, that transitions lin- early from the difference between the Board- selected benchmark replacement and the corresponding LIBOR tenor determined as of the day immediately before the LIBOR re- placement date to the relevant tenor spread adjustment. (B) On and after the date that is 1 year after the LIBOR replacement date, incor- porate the relevant tenor spread adjustment. (f) Rule of construction Nothing in this chapter may be construed to alter or impair— (1) any written agreement specifying that a LIBOR contract shall not be subject to this chapter; (2) except as provided in subsection (b), any LIBOR contract that contains fallback provi- sions that identify a benchmark replacement that is not based in any way on any LIBOR value (including the prime rate or the effec- tive Federal funds rate); (3) except as provided in subsection (b) or (c)(3), any LIBOR contract subject to sub- section (c)(1) as to which a determining person does not elect to use a Board-selected bench- mark replacement pursuant to that sub- section; (4) the application to a Board-selected benchmark replacement of any cap, floor, modifier, or spread adjustment to which LIBOR had been subject pursuant to the terms of a LIBOR contract; (5) any provision of Federal consumer finan- cial law that— (A) requires creditors to notify borrowers regarding a change-in-terms; or (B) governs the reevaluation of rate in- creases on credit card accounts under open- ended (not home-secured) consumer credit plans; or (6) except as provided in section 5804(c) of this title, the rights or obligations of any per- son, or the authorities of any agency, under