Joint Comments to the FDIC on Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions

Dear Mr. Sheesley:

The American Bankers Association (ABA) and the undersigned state bankers associations appreciate the opportunity to provide comments to the Federal Deposit Insurance Corporation (FDIC) on its proposed Guidelines Establishing Standards for Corporate Governance and Risk Management for Covered Institutions with Total Consolidated Assets of $10 Billion or More (Proposed Guidelines). In the Proposed Guidelines, FDIC shares that it believes additional, widely applicable FDIC heightened corporate governance standards are necessary to help it better avoid large insured institution failures and related risks such failures pose to the Deposit Insurance Fund (DIF). FDIC generally describes the Proposed Guidelines as a collective restatement of existing FDIC and joint agency guidance and as a means to better align its existing heightened corporate governance standards with those of the Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (FRB).

A qualified, well-informed, and active board of directors (board) is vital to an insured institution’s safety and soundness. However, FDIC has a responsibility to clearly articulate why its continuous examination process (CEP) and other components of its existing regulatory framework are insufficient to help it better avoid large insured institution failures. If any additional FDIC heightened corporate governance standards are reasonably necessary, FDIC also has a responsibility to avoid generating unreasonable risks as it reshapes prudently managed, already closely supervised institutions’ corporate governance.

Regrettably, FDIC has met neither responsibility here, and we must oppose the Proposed Guidelines both on principle and out of significant concern that the Proposed Guidelines would undermine – not strengthen – the safety and soundness of covered institutions and, in turn, the broader banking industry and the DIF.

We strongly urge FDIC to fully withdraw the Proposed Guidelines.

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