The Financial Services Roundtable (FSR) supports the Federal Reserves’ recently released statement of principles that seek to better clarify the core duties of a bank’s board of directors.
As one of the principles, the Federal Reserve said senior management should be allowed to resolve most supervisory matters requiring attention without board review or approval. FSR supports this.
FSR also supports amendments to a variety of matters that required board oversight, but have no impact on the firm’s overall performance.
“We appreciate efforts by the Federal Reserve to ensure the board of directors can focus their efforts on providing strategic direction to a firm and setting overall business and risk management goals of the companies they oversee,” Robert Hatch, senior director and regulatory counsel at FSR, said. “Better tailoring the regulatory obligations that fall on boards of directors is a key step in ensuring that both the resources of the board and the regulators are focused correctly.”
In addition, FSR asked the Federal Reserve to postpone a plan to change its supervisory rating system that would tie it to a $50 billion asset threshold.
FSR’s suggests an approach that relies on a variety of risk factors in determining ratings. Congress is currently considering a similar broader risk-based to determine the application of specific prudential standards.
“A variety of experts have been skeptical of using size alone in determining regulatory standards,” Hatch said. “We appreciate the goal of the Fed’s proposal to provide clarity and consistency, but are concerned they might not be doing enough to ensure that standards applicable to the most complex firms aren’t being applied too broadly.”