This article highlights that publicly traded business corporations and their directors have lost the confidence and trust of many, leading to an onslaught of proposed federal legislation which, if enacted, will catapult the federal government into the role of primary regulator of those companies and directors, which heretofore have been regulated under state law. This article further suggests that to stem this tide of federal intervention in an area central to our private enterprise system, U.S. public company directors must act promptly in a concerted, clear and convincing way to restore their credibility. Finally, this article proposes a program for doing so, premised on those directors voluntarily embracing a set of “Basic Principles of Director Oversight” publicly reflecting focused and real commitment by the directors to comprehensive, high-quality board oversight of corporate affairs.

The Current Environment

The financial crisis of 2008-2009 appears to have been largely overcome and the economic abyss it threatened has been averted. In its wake, however, is another quite serious threat. This threat is the product of a combination of circumstances: the psychological trauma of the financial crisis, severe real damage to the economic well-being and prospects of many Americans, a painful recession marked by massive job losses and unemployment, and, ultimately, an overwhelming need to lay blame. The target of this blame for many is American Capitalism — our private enterprise system — and, in particular, those with the responsibility for overseeing it, the boards of directors of the public companies which drive the system.

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