Q: Should directors who provide services to the bank for a fee leave the board?
ROBERT H. HALLECK
President and chief executive,
Maryland Federal Bancorp
Hyattsville, Md.
I do not think they should step down. Our chairman of the board is our general counsel. If we require legal representation, obviously we go to him. He knows us, he's able to be very knowledgeable in the representation of us. He takes even less than he probably should.
If you charge the normal fees and you do the normal amount of work, I cannot see any danger in that. That relationship makes me feel pretty comfortable. But I don't feel that is a situation where you can grant favors. The board has to approve his fee and he abstains from voting.
MANUEL J. MEHOS
Chairman and chief executive,
Coastal Banc Savings Association
Houston
We feel there is an inherent conflict of interest. The appearance is not good. We just have a policy against it. If the board member is responsible for watching management, then the board member essentially loses his independence.
I believe it should be in the regulations, but the regulations should be a guideline.
It can be done with smaller banks if it is well documented and the services are provided for fair value.
BILL CREWS
President,
Wauchula State Bank
Wauchula, Fla.
I have seen it abused around the country, mostly in the savings and loan business.
The lawyer, the real estate exeeutive, and the appraiser on the board kind of controlled the whole ball game.
In small-town banks like ours, your best customers are usually those directors who are the town's movers and shakers. If you couldn't use them, you wouldn't have a good board.
We have an attorney who is one of two outside board members. We don't pay him any more than we pay anybody else.
