Welcome!

News Feed Item

American Association of Bank Directors Questions Material Loss Reviews' Claims That Bank Directors Always to Blame for Bank Failures

WASHINGTON, DC -- (Marketwire) -- 02/05/13 -- The American Association of Bank Directors (AABD) has issued a Summary Report analyzing the Material Loss Reviews (MLRs) conducted by the Office of Inspectors General of the FDIC, Federal Reserve Board and the Department of Treasury, noting that many of the Material Loss Reviews are flawed and cannot be relied on. In reviewing a sample of MLRs of failed banks, AABD found one constant throughout -- the bank failure was always determined to be the fault of the failed bank's board of directors.

"The AABD review found that the sampled MLRs were so flawed in their methodology and assumptions as to render their findings unreliable," noted David Baris, AABD's Executive Director.

Federal law requires the appropriate Office of Inspector General among the federal banking agencies to ascertain why a failed bank's problems resulted in material loss to the Deposit Insurance Fund. The performance audits by the IG offices must "...obtain sufficient, appropriate evidence to provide a reasonable basis for its finding and conclusions based on its audit objectives."

"It appears the MLRs only tell one side of the story," Baris said. "The Inspectors General interviewed representatives of the banking agencies in charge of the failed banks and let them comment on the draft report, but the former directors and executive officers of the bank were not afforded the same courtesy."

Baris further noted, "Many of the MLRs we reviewed seem to suggest that the worsening of the economy, in some cases residential real estate prices falling by more than 50 percent, was a condition, not a cause of the bank failure. This defies logic."

"In most of the banks that ultimately failed, the bank examiners considered management and the bank to be highly or satisfactorily rated at least up to two years prior to failure, after many of the loans that caused the losses had been underwritten. It wasn't until loan losses mounted that examiners concluded that bank directors and management were to blame for deficient loan underwriting and loan administration. The MLRs assume that the later assessment of the board and management is correct and the earlier assessment is incorrect without substantiating that assumption."

According to AABD, the accuracy of the MLRs is important for many reasons. The banking agencies rely on the MLR findings to formulate policy and rules, and the FDIC considers the findings to help decide whether to sue former directors of failed banks. Congress relies on their accuracy in its legislative and investigative duties.

"MLRs are public; the reputation of the board and management of the failed bank also is at stake," Baris added.

The AABD issued a series of recommendations to the Inspectors General, including inviting directors and executive officers to review the documents on which the IG office is relying, to be interviewed, and to comment on the draft report; reflecting the comments of the directors and officers in the final report; and posting comments from former directors and officers on already issued MLRs.

Founded in 1989, the non-profit American Association of Bank Directors (AABD) is the only trade group in the United States solely devoted to bank directors and their information, education, and advocacy needs. Visit AABD online at: http://www.aabd.org.

Add to Digg Bookmark with del.icio.us Add to Newsvine

CONTACT:
BETTY PELTON
(202) 463-4888
Email Contact

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Everywhere we turn in our industry we can find strong opinions about the direction, type and nature of cloud’s impact on computing and business. Another word that is used in every context in our industry is “hybrid.” In his session at 20th Cloud Expo, Alvaro Gonzalez, Director of Technical, Partner and Field Marketing at Peak 10, will use a combination of a few conceptual props and some research recently commissioned by Peak 10 to offer a real-world consideration of how the various categories of...
While some vendors scramble to create and sell you a fancy solution for monitoring your spanking new Amazon Lambdas, hear how you can do it on the cheap using just built-in Java APIs yourself. By exploiting a little-known fact that Lambdas aren’t exactly single threaded, you can effectively identify hot spots in your serverless code. In his session at 20th Cloud Expo, David Martin, Principal Product Owner at CA Technologies, will give a live demonstration and code walkthrough, showing how to ov...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
In order to meet the rapidly changing demands of today’s customers, companies are continually forced to redefine their business strategies in order to meet these needs, stay relevant and continue to see profitable growth. IoT deployment and development is integral in this transformation, and today businesses are increasingly seeing the value of investing their resources into IoT deployments. These technologies are able increase ROI through projects such as connecting supply chains or enabling sm...
This talk centers around how to automate best practices in a multi-/hybrid-cloud world based on our work with customers like GE, Discovery Communications and Fannie Mae. Today’s enterprises are reaping the benefits of cloud computing, but also discovering many risks and challenges. In the age of DevOps and the decentralization of IT, it’s easy to over-provision resources, forget that instances are running, or unintentionally expose vulnerabilities.
In his session at 20th Cloud Expo, Brad Winett, Senior Technologist for DDN Storage, will present several current, end-user environments that are using object storage at scale for cloud deployments including private cloud and cloud providers. Details on the top considerations of features and functions for selecting object storage will be included. Brad will also touch on recent developments in tiering technologies that deliver single solution and an end-user view of data across files and objects...
Multiple data types are pouring into IoT deployments. Data is coming in small packages as well as enormous files and data streams of many sizes. Widespread use of mobile devices adds to the total. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the tools and environments that are being put to use in IoT deployments, as well as the team skills a modern enterprise IT shop needs to keep things running, get a handle on all this data, and deli...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
Regardless of what business you’re in, it’s increasingly a software-driven business. Consumers’ rising expectations for connected digital and physical experiences are driving what some are calling the "Customer Experience Challenge.” In his session at @DevOpsSummit at 20th Cloud Expo, Marco Morales, Director of Global Solutions at CollabNet, will discuss how organizations are increasingly adopting a discipline of Value Stream Mapping to ensure that the software they are producing is poised to ...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
IBM helps FinTechs and financial services companies build and monetize cognitive-enabled financial services apps quickly and at scale. Hosted on IBM Bluemix, IBM’s platform builds in customer insights, regulatory compliance analytics and security to help reduce development time and testing. In his session at 20th Cloud Expo, Tom Eck, Industry Platforms CTO at IBM Cloud, will discuss how these tools simplify the time-consuming tasks of selection, mapping and data integration, allowing developer...
For financial firms, the cloud is going to increasingly become a crucial part of dealing with customers over the next five years and beyond, particularly with the growing use and acceptance of virtual currencies. There are new data storage paradigms on the horizon that will deliver secure solutions for storing and moving sensitive financial data around the world without touching terrestrial networks. In his session at 20th Cloud Expo, Cliff Beek, President of Cloud Constellation Corporation, ...
Interested in leveling up on your Cloud Foundry skills? Join IBM for Cloud Foundry Days on June 7 at Cloud Expo New York at the Javits Center in New York City. Cloud Foundry Days is a free half day educational conference and networking event. Come find out why Cloud Foundry is the industry's fastest-growing and most adopted cloud application platform.
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend @CloudExpo | @ThingsExpo, June 6-8, 2017, at the Javits Center in New York City, NY and October 31 - November 2, 2017, Santa Clara Convention Center, CA. Learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...