June 25, 2020
AABD Launches Bank Director Liability Mitigation Assistance
We know from experience that when the economy is in a recession, banks become more vulnerable to enforcement actions and liability risks along with their directors. Bank directors often are blamed after-the-fact for their banks’ financial decline. That is when risks of personal liability increase.
Bank directors need to be prepared and take steps now to mitigate their personal liability risk.
Let AABD help you and your bank do that. You can email AABD President David Baris at [email protected].
Your board should be evaluating a number of matters now, including the following:
- The role of the board and its committees in approving or ratifying loans
- The role of the board and its committees in establishing and monitoring loan policies and procedures
- Information sources utilized by your board
- Board reports
- Use of red flags
- Board response to the coronavirus threat
- Policies on escalation of issues to the board and its committees
- The sufficiency of corporate governance and ERM
- The role of the Audit Committee in overseeing your bank’s financials, particularly its reserve for loan losses
- Loan policies that exaggerate the role of the board or its committees
- The sufficiency of minutes and other documentation of your board’s decision-making and oversight responsibilities
- The sufficiency of your D&O insurance policies
- Article and Bylaw provisions that can minimize personal liability of bank directors