For the past seven months, an arcane financial-markets proposal has been collecting dust in the statehouse halls of Albany, New York. Between the pandemic and the racial-justice protests, lawmakers have been so preoccupied that no one in either chamber has even initiated the legislative process on it.

But to bankers, investors, and regulators, this is no run-of-the-mill document. It's a proposal that's crucial to ensuring that a huge swath of the global financial system—involving deals worth potentially trillions of dollars—doesn't turn into a chaotic, lawsuit-riddled mess when the London interbank offered rate (LIBOR) is officially discontinued at the end of next year. And while that still leaves 15 months to hammer out a solution, Albany is not expected back in session until January. Anxiety is already mounting among those on Wall Street who had originally expected the proposal to sail through the legislative process in the spring.

The proposed law would slide a comparable new rate into deals that reference LIBOR and don't have provisions for a backup. So many contracts will fall into legal limbo without this type of law that bankers say there's really no way to try to renegotiate all of them, or even a fraction of them, in the run-up to LIBOR's expiration. Which leaves them with little recourse for now beyond lobbying state lawmakers.