WASHINGTON — Rep. Andy Barr, R-Ky., chairman of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, asked the Federal Deposit Insurance Corp. to withdraw a corporate governance proposal.
Last year, the FDIC
Specifically, the FDIC would require that bank board directors should manage the banks' risk profile — a job that Barr argues is typically done by bank management — and reduce conflicts of interest among board members.
"Through its proposed rulemaking, the FDIC proposes to blur the longstanding distinction between the roles of the board of directors and bank management, inappropriately shifting management responsibilities to the board," Barr said in the letter. "In addition, the proposal dictates the composition of the board and inappropriately charges directors with considering the interests of non-shareholder 'stakeholders' such as creditors, regulators, and the public."
The FDIC proposal would also require a majority of a bank's board of directors to be unaffiliated with the bank's parent holding company, a stipulation Barr said would only make bank management less efficient.
"Many banking organizations have an overlap between the boards of the bank and the holding company, which benefits the overall banking organization by ensuring holistic board oversight," he said. "New restrictions on board compositions will result in needless turnover and may reduce the number of qualified directors available to banking organizations."
State-supervised banks, as well as other industry groups, opposed the FDIC's guidance in comment letters.
The letter comes as FDIC Chair Martin Gruenberg is scheduled to testify in the Senate Banking Committee and House Financial Services Committee this week. Gruenberg's testimony is being
Republicans in Congress have called for Gruenberg's resignation, and one Democratic lawmaker, Rep. Bill Foster, D-Ill., has joined them. Leading progressive lawmakers such as Sens. Elizabeth Warren, D-Mass., Sherrod Brown, D-Ohio, and Rep. Maxine Waters, D-Calif., have condemned the agency's behavior but said nothing about Gruenberg's future at the agency.
Waters also criticized the report — conducted by law firm Cleary Gottlieb — saying that it focused on the Democratic chair, Gruenberg, rather than any misbehavior by Republican leaders of the agency.
"The Cleary report places the focus for 'tone at the top' solely on the Democratic Chair under whose leadership the agency received the most favorable ratings from its employees, while it completely ignores the activities of the two previous Republican Chairs," she said.
