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NACD Comments on FDIC Proposed Guidelines
02/05/2024
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NACD SAYS PROPOSED FDIC RULES CREATE UNINTENDED CONSEQUENCES AND RISK SETTING PRECEDENTS THAT EXTEND BEYOND THE BANKING SECTOR
WASHINGTON, DC (February 5, 2024) – In a recent letter to the Federal Deposit Insurance Corporate (FDIC), the National Association of Corporate Directors (NACD) expressed concern that the FDIC’s proposed Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions with Total Consolidated Assets of $10 Billion or More may trigger several unintended consequences that could cascade beyond the banking sector. As the leading independent voice of corporate directors, NACD has included in its letter several recommendations that will help the FDIC strengthen governance in the institutions it oversees without burdening or constricting their ability to make sound decisions on behalf of their owners and depositors.
“We commend and thank the FDIC for its continued dedication to maintaining stability and public confidence in America’s banking system. While its proposed guidance is well intended, we are concerned about the precedents this rulemaking could set for sectors beyond banking,” said Peter Gleason, NACD president and CEO. “We encourage the FDIC to recast its guidelines as voluntary, and we welcome the opportunity to connect the FDIC with NACD members who serve on bank boards and can provide real-world insights and observations.”
NACD questions the following seven aspects of the FDIC’s proposed guidance and, in its letter, offers solutions that reflect the organization’s decades-long role as a trusted corporate governance leader, educator, and innovator:
1. their broad scope,
2. their blurring of the roles of management and the board,
3. their conflict with state law,
4. their prescriptive nature,
5. their implications for D&O liability,
6. their low size threshold, and,
7. the time burden they could impose.
To further assist the FDIC in its rulemaking, NACD also recommended that the agency refer to the association’s own voluntary guidelines, appearing in these reports:
Media Contacts:
Kathy King
kking@nacdonline.org
Shannon Bernauer
sbernauer@nacdonline.org