Ready or not, borrowers are involuntarily seeing changes in the
interest rates they are being charged. Why, you ask? Because there
are serious, systemic risks associated with the most widely used
interest rate basis in the world - the London Interbank Offered
Rate (or LIBOR), including the LIBOR Rate for U.S. Dollar
denominated loans and other financial products (USD LIBOR). The
situation is so serious that regulatory authorities have said that "given
consumer protection, litigation, and reputation risks, [they]
believe entering into new contracts that use USD LIBOR as a
reference rate after December 31, 2021, would create safety and
soundness risks . . .". In our view, all of this means that
borrowers should prepare themselves to deal with forthcoming
interest rate changes in as effective a manner as possible (and not
wait until the inevitable occurs later this year).
