(Bloomberg) — Wall Street banks must speed up their efforts to stop using Libor, regulators said Friday, issuing one of their sternest warnings yet about abandoning the scandal-plagued benchmark.

From Treasury Secretary Janet Yellen to Federal Reserve Chairman Jerome Powell, watchdogs made clear during a meeting of the Financial Stability Oversight Council that time is running out. The admonishment — coming from the heads of all of the U.S.’s most powerful financial agencies — marked a remarkably high-profile push to light a fire under banks including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc.

“The deniers and laggards are engaging in magical thinking,” said Randal Quarles, the Fed’s vice chairman for supervision. “Libor is over.”

Transitioning away from the foundational reference rate has been a costly ordeal because Libor has long been at the heart of so many transactions, from home mortgages to complex derivatives contracts. Global regulators have repeatedly cautioned that 2021 is the benchmark’s wind-down year and are pushing market participants toward alternatives such as the Secured Overnight Financing Rate.

Read More: Why Ditching Libor Is Vexing the Financial World

“While important progress is being made in some segments of the market, other segments, including business loans, are well behind where they should be,” said Yellen, who leads FSOC, a group set up after the 2008 crisis that’s responsible for heading off dangers to the financial system. She added that she’d like to see firms make the switch to SOFR in derivatives contracts this summer.

Libor Challengers

A number of Libor challengers — from the American Financial Exchange’s Ameribor to ICE’s Bank Yield Index — have been gaining some traction in recent weeks, or at least garnering more attention.

The Bloomberg Short-Term Bank Yield Index, or BSBY, is also a competitor in this space. It is administered by Bloomberg Index Services Ltd., a subsidiary of Bloomberg LP, the parent of Bloomberg News.

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The increased focus on these other rates comes as borrowers and bankers question whether SOFR — Fed’s long-preferred replacement — is the best option for the multitude of markets that must ditch Libor.

Securities and Exchange Commission Chair Gary Gensler argued that the Bloomberg rate “presents similar risks to financial stability and market resiliency” and that SOFR remains the safest alternative. Among his main critiques of BSBY is that it is based on too few trades to be a viable reference rate for trillions of dollars in transactions.

The “markets underpinning BSBY not only are thin in good times; they virtually disappear in a crisis,” Gensler said.

Read More: SEC’s Gensler Says He Has Concerns About Libor Alternative BSBY

In his comments, Quarles also emphasized that market participants shouldn’t expect non-SOFR alternatives to be widely available.

The Alternative Reference Rates Committee, which has been overseeing the transition away from U.S. dollar Libor, said in a progress report in March that outstanding contracts referencing the rate total about $223 trillion, up from $200 trillion three years ago. While an estimated 60% of current exposures will mature before mid-2023, the current end date for dollar Libor, about $90 trillion of contracts will remain outstanding.

Tough Consequences

The Fed has already warned major banks they will face consequences for failing to wean off Libor fast enough. The U.S. central bank told firms in a letter issued in March that it would examine their Libor transition plans, and senior leaders will need to show budgets and resources dedicated to the shift. Foreign firms should measure their exposures booked or managed within their U.S. operations, the Fed said.

The push to encourage SOFR adoption received a boost earlier this week when a subcommittee that advises the Commodity Futures Trading Commission recommended that interdealer brokers replace trading of linear swaps tied to Libor with trading of SOFR linear swaps starting July 2. If that comes to pass, it could accelerate the creation of officially sanctioned term SOFR rates, which have been held back in part by a lack of market depth in related derivatives.

Also on Friday, FSOC approved a statement pledging to continue monitoring the SEC’s examination of prime money market mutual funds, which endured an investor flight when the pandemic roiled financial markets in March 2020.

Gensler said he was directing his agency to “look into these issues, in coordination with other federal agencies, and to consider any further reforms needed.”

(Updates with resolution on money market mutual funds in 13th paragraph)

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