Recently, a group of House Republicans sent a letter to Martin Gruenberg, Chairman of the FDIC, expressing concerns regarding the proposed corporate governance and risk management guidelines that would apply to all insured state nonmember banks, state-licensed insured branches of foreign banks, and insured state savings associations subject to Section 39 of the FDI Act. The proposal was titled Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions With Total Consolidated Assets of $10 Billion or More (covered by InfoBytes here). The congressmembers argued the FDIC lacks the authority to issue these guidelines under its statutory power. However, the letter also included three arguments outlining why the guidelines are flawed even if the FDIC had the appropriate statutory authority. First, the congressmembers claimed the guidelines would significantly alter corporate governance practices, impose unrealistic responsibilities on boards of directors, and increase liability to the boards. Second, they asserted the requirement for directors to “consider the interests of all its stakeholders” set forth in the guidelines conflicted with existing state laws on directors’ fiduciary duties. Third, they contended the asset threshold for applying these guidelines is set too low compared to other heightened banking regulatory frameworks, such as those set by the OCC or the Fed. The letter concluded by urging the FDIC to withdraw the proposed guidelines and consider public feedback.
