Have you ever heard of taking a non-cash charge of $1.6 billion? Well, Bank of America certainly has, and they're about to make headlines with it. It seems that the bank will be shouldering this hefty charge in the fourth quarter of this year, and believe it or not, it's all because of the cessation of a loan index. That's right, folks, a loan index causing an eye-watering $1.6 billion charge.
Now, you might be wondering, what exactly does 'cessation of a loan index' mean? Well, here's the scoop. Bank of America has made the decision to stop using the London interbank offered rate, or LIBOR, which is a benchmark interest rate that helps determine lending costs all around the world. The LIBOR has been extensively used for decades, but it's now being phased out due to some rather unsavory manipulation scandals. With LIBOR on its way out, Bank of America is transitioning to alternative indices.
