Click here to close now.




















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
"We've just seen a huge influx of new partners coming into our ecosystem, and partners building unique offerings on top of our API set," explained Seth Bostock, Chief Executive Officer at IndependenceIT, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Mobile, social, Big Data, and cloud have fundamentally changed the way we live. “Anytime, anywhere” access to data and information is no longer a luxury; it’s a requirement, in both our personal and professional lives. For IT organizations, this means pressure has never been greater to deliver meaningful services to the business and customers.
Digital Transformation is the ultimate goal of cloud computing and related initiatives. The phrase is certainly not a precise one, and as subject to hand-waving and distortion as any high-falutin' terminology in the world of information technology. Yet it is an excellent choice of words to describe what enterprise IT—and by extension, organizations in general—should be working to achieve. Digital Transformation means: handling all the data types being found and created in the organizat...
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
Chuck Piluso presented a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. Prior to Secure Infrastructure and Services, Mr. Piluso founded North American Telecommunication Corporation, a facilities-based Competitive Local Exchange Carrier licensed by the Public Service Commission in 10 states, serving as the company's chairman and president from 1997 to 2000. Between 1990 and 1997, Mr. Piluso served as chairman & founder of International Te...
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin,...
Container technology is sending shock waves through the world of cloud computing. Heralded as the 'next big thing,' containers provide software owners a consistent way to package their software and dependencies while infrastructure operators benefit from a standard way to deploy and run them. Containers present new challenges for tracking usage due to their dynamic nature. They can also be deployed to bare metal, virtual machines and various cloud platforms. How do software owners track the usag...
SYS-CON Events announced today that MobiDev, a software development company, will exhibit at the 17th International Cloud Expo®, which will take place November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software development company with representative offices in Atlanta (US), Sheffield (UK) and Würzburg (Germany); and development centers in Ukraine. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobi...
With SaaS use rampant across organizations, how can IT departments track company data and maintain security? More and more departments are commissioning their own solutions and bypassing IT. A cloud environment is amorphous and powerful, allowing you to set up solutions for all of your user needs: document sharing and collaboration, mobile access, e-mail, even industry-specific applications. In his session at 16th Cloud Expo, Shawn Mills, President and a founder of Green House Data, discussed h...
For IoT to grow as quickly as analyst firms’ project, a lot is going to fall on developers to quickly bring applications to market. But the lack of a standard development platform threatens to slow growth and make application development more time consuming and costly, much like we’ve seen in the mobile space. In his session at @ThingsExpo, Mike Weiner, Product Manager of the Omega DevCloud with KORE Telematics Inc., discussed the evolving requirements for developers as IoT matures and conducte...
There are many considerations when moving applications from on-premise to cloud. It is critical to understand the benefits and also challenges of this migration. A successful migration will result in lower Total Cost of Ownership, yet offer the same or higher level of robustness. In his session at 15th Cloud Expo, Michael Meiner, an Engineering Director at Oracle, Corporation, analyzed a range of cloud offerings (IaaS, PaaS, SaaS) and discussed the benefits/challenges of migrating to each offe...
One of the hottest areas in cloud right now is DRaaS and related offerings. In his session at 16th Cloud Expo, Dale Levesque, Disaster Recovery Product Manager with Windstream's Cloud and Data Center Marketing team, will discuss the benefits of the cloud model, which far outweigh the traditional approach, and how enterprises need to ensure that their needs are properly being met.
In their session at 17th Cloud Expo, Hal Schwartz, CEO of Secure Infrastructure & Services (SIAS), and Chuck Paolillo, CTO of Secure Infrastructure & Services (SIAS), provide a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. In his role as CEO of Secure Infrastructure & Services (SIAS), Hal Schwartz provides leadership and direction for the company.
In a recent research, analyst firm IDC found that the average cost of a critical application failure is $500,000 to $1 million per hour and the average total cost of unplanned application downtime is $1.25 billion to $2.5 billion per year for Fortune 1000 companies. In addition to the findings on the cost of the downtime, the research also highlighted best practices for development, testing, application support, infrastructure, and operations teams.
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.