(Bloomberg) -- The U.S. House approved legislation designed to protect trillions of dollars of assets from chaos when Libor expires, in one of the final key steps aimed at guaranteeing an orderly transition from the discredited benchmark.

By a vote of 415-9, House lawmakers on Wednesday backed provisions to switch the most troublesome contracts, including mortgages, business and student loans, to a replacement benchmark in an effort to prevent a flood of litigation when dollar Libor retires. The bill will now head to the Senate.

Bankers, investors and regulators see such proposals as crucial to ensuring that a large swath of the U.S. financial system isn’t disrupted. The move follows similar legislation in New York state to protect Wall Street that passed in March, and a regulatory decision to extend key dollar Libors until mid-2023 to allow trillions of dollars of contracts to die off naturally.

“This is the final hurdle for legacy cash products under U.S. law,” Priya Misra, global head of interest rate strategy at TD Securities and a member of the Alternative Reference Rates Committee, the Federal Reserve-backed body guiding the transition, said before the vote. “Now we just need to make sure the post-Libor world can function well with the Secured Overnight Financing Rate,” she said, referring to the main dollar Libor replacement.

Federal legislation is still needed to protect some $16 trillion of deals outside New York that may survive beyond 18 months -- and which could pose a threat to financial stability. These products are especially challenging because many were drawn up before anyone knew Libor would end, and lenders must secure consent from borrowers for the switch, which can be difficult to obtain.

Regulators are phasing out Libor following major manipulation scandals and the drying up of trading used to inform the rates, which are linked to everything from credit cards to leveraged loans.

The House legislation would automatically shift contracts that would otherwise face a cliff-edge scenario to a new benchmark, with the aim of preventing disputes over which rate should apply, how interest is calculated and how much is owed. It also includes so-called safe-harbor provisions, designed to deter lawsuits seeking damages.

Lawmakers gave their backing after the bill’s sponsor, Democratic Representative Brad Sherman, backed down in a dispute over the treatment of tax. Language has been removed from the draft that would have explicitly prevented the Internal Revenue Service from recalculating firms’ tax liability, a move that in theory could eat into banks’ profits.

Sherman said the Senate is still weighing his bill. He said Republican Senator Pat Toomey of Pennsylvania had a concern the bill will coerce business to use specific rates, but that nothing in the bill authorizes regulators to using a specific reference rates

“The report language was drafted with Senator Toomey in mind,” he said, adding that business groups support the bill and don’t view it as government interference.

“We really appreciate this great bipartisan support,” said Thomas Pluta, JPMorgan Chase & Co.’s global head of linear rates trading. “Now we need the Senate to move quickly to provide certainty to markets and consumers.”

Brian Grabenstein, head of Libor transition at Wells Fargo & Co., said legislation was needed to secure an orderly transition for contracts that can’t be amended.

The U.K. hasn’t faced the same complications around sterling Libor, partly because of its different exit strategy. Libor’s administrator will publish a “synthetic” Libor number, which doesn’t require trading data from panel banks, to help contracts avoid a cliff-edge scenario at the end of 2021 when the U.K. benchmark will retire. The U.K. Financial Conduct Authority said in March that it is considering a similar arrangement for dollar Libor.

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