American Association of Bank Directors Releases Bank Director Regulatory Burden Report


In response to President Obama’s initiatives to identify and reduce unnecessary governmental burdens on the private sector, the American Association of Bank Directors (“AABD”) today released its “Bank Director Regulatory Burden Report,” which includes a review of laws, regulations and federal banking agency regulatory guidance that direct bank boards of directors to take certain action. The Report identifies over 800 legislative and regulatory provisions that impact bank directors. AABD is requesting that the federal banking agencies take immediate action to develop a regulatory review process to address not only laws and regulations, but also the numerous regulatory guidance provisions affecting bank directors.

“The overburdening of bank directors with responsibilities that are insignificant or that are better delegated to management is a serious public policy issue,” noted AABD Executive Director, David H. Baris, the co-author of the Report. “Bank directors need to focus on the important issues facing their banks to meet their fundamental duties of care and loyalty.”

Baris further explains, “It is evident that no one — not Congress and not the federal banking agencies — is evaluating the aggregate effect that legislative and regulatory actions are having on the duties and responsibilities of bank directors. Bank directors are entitled to exercise their business judgment in good faith, delegate duties to management, and reasonably rely on such management. One would never know that by reading the voluminous admonishments and directives in the documents we have compiled.”

AABD recognized the need for a central repository of all of the obligations imposed on bank directors. The Report provides a compilation, accomplished through months of searching and evaluating numerous disparate documents. For ease of reference, the regulatory guidance material and regulations have been grouped under each federal banking agency.

“This ever-increasing regulatory burden is a significant distraction from board time necessary for risk oversight and other essential board responsibilities,” explained Charles J Thayer, AABD Chairman. “The increasing threat of personal liability is forcing bank boards to become ‘compliance’ boards where attention must be focused on satisfying laws, regulations, and regulatory guidance that often pertain to duties that are properly the function of day-to-day management.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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