On Jan. 19, 2021, New York Governor Andrew Cuomo proposed legislation addressing the discontinuance of LIBOR in his 2022 fiscal year executive budget proposal. This proposed “Article 18-C” would require the use of the “recommended benchmark replacement” made by the Federal Reserve Board, the Federal Reserve Bank of New York or the Alternative Reference Rates Committee (“ARRC”) where the contract is either silent on LIBOR discontinuance or where the contract’s current fallback provision is to a LIBOR-referencing rate. Where the contract’s provisions allow discretionary selection of a fallback rate, Article 18-C would grant a safe harbor for the selection of the recommended benchmark replacement. If enacted, the legislation would take effect immediately.
The Memorandum in Support — See Part PP, page 38