The American Bankers Association sponsored a telephone educational seminar for bank directors Wednesday, and if some of the questions that were asked are any indication, the directors needed it.
Nearly 600 bank directors throughout the country listened for about 90 minutes as experts gave pointers on how to keep banks safe and sound, as well as how to properly oversee executives without micromanaging.
Once the presenters started taking questions, it was apparent that many of the listeners not only were paying close attention but also needed guidance on a host of regulatory issues.
There was a long discussion on how to record and read the minutes of board meetings. Another director asked whether he would ever be legally liable if the bank were to receive an “unsatisfactory” rating after a Community Reinvestment Act examination.
Still another director seemed to have a very difficult time accepting the fact that even though his $450 million-asset privately held bank would not be subject to the Sarbanes-Oxley Act if it grew to $500 million, it would still be subject to heightened regulatory scrutiny, just because of its new size.
Under the Federal Deposit Insurance Corp. Improvement Act, privately held banks and thrifts with assets of $500 million or more are subject to certain Sarbanes-Oxley-like requirements. For instance, they must submit to regulators an auditor’s certification of internal procedures for financial reporting. Sarbanes-Oxley, which technically applies only to public companies, was passed in 2002 in response to a wave of corporate scandals.
George Cleland, the ABA’s director of creative services, who moderated the conference call, said afterward that it was apparent that many of the directors who participated are not used to being involved in such a heavily regulated industry.
“Some of these directors at community banks are good businesspeople, but they are new to banking,” Mr. Cleland said. “Their questions sound basic to those of us who’ve been in the industry for a long time, but they need to be answered.”
The conference call format may have made directors more comfortable to ask whatever popped into their minds, he said.
At the end of the call six people were still waiting to ask questions, but time had run out.
Mr. Cleland said his trade group plans to conduct more telephone seminars that would be particularly suited for people who have never attended a bank director conference.
“This is short and sweet, and they don’t have to spend a lot of money traveling around the country,” he said. In fact, it was a banker in Alaska who had suggested that the ABA conduct such calls for his directors.
