The American Association of Bank Directors submitted comments to the OCC last week regarding its recently proposed OCC guidelines on risk management for large national or federal savings banks and provided the following recommendations:

  1. Issue these Guidelines as real guidelines and not as a Part 30 or other 'safety or soundness' regulation authorized pursuant to Section 39 of the FDI Act (the current proposal allows the OCC to impose an order unilaterally on a bank without the bank being entitled to a review by an independent third party (an administrative law judge), and such order is enforceable by the OCC);
  2. The Guidelines should be applicable to only the largest institutions (the proposal allows the OCC to apply it to other national or federal savings banks, regardless of size);
  3. Eliminate the requirement that the board of directors 'ensure' an effective risk management framework or other results-oriented obligations (the obligation to 'ensure' results is inconsistent with the director standards of care in all fifty states);
  4. Reconsider the Guidelines in their entirety in order to take account of the cumulative effect the Guidelines may have on the overall burdens on bank directors and to reconsider language in the Guidelines that might be construed as increasing the risk of personal liability of a bank director (AABD's 'Bank Director Regulatory Burden Report identifies over 800 provisions in law, regulation or regulatory guidance requiring bank directors to take certain actions.  Bank boards are already overburdened.  Some are also resigning over fear of personal liability);
  5. Eliminate the requirement that there be at least two bank directors who are independent of the parent company (this decision should be made by a bank board as part of its corporate governance process, not dictated from above); and
  6. Eliminate the formal training requirement (again, this should be a decision of the bank board depending on the individual needs of a bank director to serve effectively).
Download PDF: AABD Comment Letter Re OCC-2014-0001

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