Federal Reserve Board Finalizes Board Effectiveness Guidance
View Debevoise In Depth
Key takeaways:
- On February 26, 2021, the Federal Reserve Board (the “FRB”) released final supervisory guidance setting forth expectations for boards of directors of domestic bank holding companies and savings and loan holding companies with total consolidated assets of $100 billion or more.
- FRB examiners will use the guidance, which details five attributes of an effective board, to evaluate a board for purposes of rating an institution’s governance and controls under the large financial institution rating system.
- In a shift from previous FRB expectations, the guidance attempts to better distinguish a board’s responsibilities from those of management and focus the board’s attention on its core responsibilities by emphasizing the board’s oversight role and reallocating tasks from the board to management.
- Concurrently, the FRB announced conforming changes to 12 SR letters and that it had “made inactive” another nine SR letters.