Having transformed U.S. bank regulation, Dodd-Frank implementation is now reshaping bank corporate governance. Recent rulemakings and proposals by the Board of Governors of the Federal Reserve System (Federal Reserve) point to a far more prescriptive approach to corporate governance for significant bank holding companies and significant foreign banking organizations with U.S. operations (FBOs) than traditionally has been the case. This approach should also be expected to apply to systemically significant nonbank financial companies (Nonbank SIFIs) designated by the Financial Stability Oversight Council.

In addition, Dodd-Frank has allowed regulators to expand their toolkit for dealing with perceived corporate governance failings, and so non-compliance with the new governance requirements may lead to greater supervisory consequences.

Below, we describe the principal new responsibilities that boards of directors and senior management should expect under the Federal Reserve’s new supervisory regime, as well as the increased penalties that may be imposed if those responsibilities are not met.

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