The FDIC's recent proposal to tighten controls on insider transactions is a necessary response to some of the excesses that failed banks and S&Ls committed in the 1980s. Although it places still another set of administrative burdens on bank boards and managements, it is hard to say that this one isn't necessary.

The proposal can be made much better, however, by amending it in two respects to prevent the Federal Deposit Insurance Corp. from narrowly based second-guessing of board of directors' judgments, and to make an independent committee of the board, rather than the full board, responsible for compliance.

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