David Baris Quoted in Bloomberg BNA Article, “Bank Directors Feel the Squeeze as Tasks, Liabilities Grow”

David Baris was quoted in Michael Greene’s Bloomberg BNA article, “Bank Directors Feel the Squeeze as Tasks, Liabilities Grow,” on May 16, 2016.

Greater regulatory scrutiny, more oversight responsibilities, and an increase in personal liability exposure are some of the challenges that are making a bank director’s job more difficult, practitioners told Bloomberg BNA.

Bank directors have fiduciary duties that apply to all boards under state laws, as well as over 800 provisions “in law, regulation, and regulatory guidance that impose burdens on bank directors that far exceed what would be required under fiduciary duty standards,” said David Baris, a Washington-based partner at BuckleySandler LLP who also is president of the American Association of Bank Directors (AABD).

Among other recent measures, the Fed, the FDIC, and other banking regulators recently proposed requirements to restrict risk taking by bank executives.

In terms of sanctions, the Committee on Capital Markets Regulation found that financial institutions continue to face “historically unprecedented public financial penalties.” According to the group, public settlements and regulatory penalties for financial institutions amounted to $5.1 billion in the first quarter of 2016.

Bank directors also have to undertake more tasks since the financial crisis. It is not uncommon for such directors to receive 900 pages or more in their board packages for monthly meetings, Baris said. In addition, board members are expected to read hundreds of pages more in committee reports, while bank regulatory guidance requires them to approve more than 50 written policies annually.

Moreover, many of the regulatory guidance provisions, “which are often applied by the federal banking agencies as if they are laws or regulations,” are requiring bank directors to take on the traditional responsibilities of bank management, Baris said. “None of the regulatory guidance acknowledges that bank directors, like other corporate directors, may rely reasonably on management, advisors, and counsel.”

Click here to read the full article at www.bna.com (subscription required).

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