Richard M. Alexander is partner and chairman, and Kevin M. Toomey is an associate, at Arnold & Porter Kaye Scholer LLP. This post is based on an Arnold & Porter Kay Scholer publication by Mr. Alexander, Mr. Toomey, Brian McCormally, Robert Azarow, Dave Freeman, and Michael Mancusi.
On August 9, 2017, the Board of Governors of the Federal Reserve System (FRB) published proposed guidance (Proposal) that would address supervisory expectations on boards of directors of banks and holding companies, as applicable.
The Proposal results from a multi-year review of practices of boards of directors, particularly at the largest banking organizations, which assessed, among other things, factors that make boards effective, the many challenges boards face, and how boards influence the safety and soundness of their enterprises and promote compliance with laws and regulations. Findings from the review, as noted in the preamble to the Proposal, suggest what many bank and bank holding company board members have noted for some time: that supervisory expectations for boards and senior management have become increasingly difficult to distinguish, boards often devote significant time to non-core tasks, and boards are disadvantaged by information flow challenges.
