AABD Survey Results on Measuring Bank Director Fear of Personal Liability Are Not Good News
WASHINGTON, DC (April 9, 2014) – There has been substantial negative fallout from bank directors' fear of personal liability, a recent survey conducted by the American Association of Bank Directors ('AABD') suggests.
24.5% of bank respondents advised AABD that at least one of the following had occurred during the past five years:
- Director resigned citing fear of personal liability
- Director candidate refused offer to become director because of fear of personal liability and/or
- Director refused to serve on Board Loan Committee or resigned from that committee because of fear of personal liability.
'The AABD survey results are disheartening to those who advocate, as AABD does, for a strong bank board that is able to attract and retain the best people possible to serve as bank directors,' David Baris, Executive Director, said.
'It may very well be that many bank boards of directors continue to consist of highly capable directors,' Baris said. 'However, attrition caused by personal liability fears is of concern and can be relatively easily rectified by appropriate actions taken by the federal banking agencies and the U.S. Congress.'
The survey report identifies some of the factors AABD believes have contributed to the problem.
These include suits by the FDIC against former directors of failed banks based on simple negligence and where directors acted in good faith; uptick in enforcement actions and threats against bank directors; and obstacles erected by the FDIC to bank directors being able to defend themselves in suits and actions challenging their official actions as directors.
The Survey Report and Survey Questions can be downloaded below.
Founded in 1989, the non-profit American Association of Bank Directors is the only trade group in the United States solely devoted to bank directors and their information, education, and advocacy needs. AABD recently established the Bank Director Liability Resource Center, which acts as a clearinghouse for developments in bank director liability, including lawsuits by FDIC against directors of failed banks and savings institutions. The Institute for Bank Director Education, established in 1993 as the educational arm of AABD, acts as a clearinghouse for education programs designed for bank and savings institution directors that support the nationally recognized Director Certification Program. Visit AABD online at: http://www.aabd.org.