The Fed Wants to Make Life Easier for Big-Bank Directors
As the Fed explained in 2013, “communication of supervisory findings to the organization’s
board of directors is an important part of the supervision of a banking organization.”
Now the Fed seems to view such findings as too much information for bank directors.
Such matters would only be directed to the board for corrective action when senior management fails to take appropriate
remedial action or when the board needs to address its corporate governance responsibilities, the Fed said.
“I think bank examiners feel their findings have more weight with management when the board is also in the loop.”
Since Mr. Tarullo left the Fed, Jerome H. Powell, a Federal Reserve Board governor who is
head of its bank oversight committee, has spearheaded the changes for bank directors.
Here’s what the Fed wants to change: Currently, its examiners report all regulatory matters
requiring corrective action to a bank’s board as well as its senior management.
While some Wells Fargo shareholders are urging the bank’s directors to sharpen their scrutiny in the wake of continuing misconduct, it’s noteworthy
that new regulatory guidance put forward by the Federal Reserve Board, the nation’s top financial regulator, would go in the opposite direction.
The Fed is careful to say that boards of directors would still be responsible for holding senior management accountable for fixing supervisory flaws.
