What to Watch for as LIBOR Fades Into History
Businesses mired down by the impacts of COVID-19 are facing enough difficulties. But the march to LIBOR’s end has continued unabated.
Businesses mired down by the impacts of COVID-19 are facing enough difficulties. But the march to LIBOR’s end has continued unabated.
Lenders such as banks, mortgage lenders, and credit unions manage large portfolios of fixed-rate loans. Typically, these assets are funded with floating-rate liabilities. This mismatch between fixed-rate assets and floating-rate liabilities can cause unwelcome earnings volatility.
The translation process converts local currency financial statements of subsidiaries into USD based financials for consolidation and reporting purposes.
In March, the FASB issued ASU 2020-04 on the “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.”
In this video, Ruth Hardie, senior director of client services, provides an overview of what you can expect from interest rate swaps given the current large drop in rates.