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
DevOps at Cloud Expo – being held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real r...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
Your clients expect transactions to never fail, cloud access to be fast and always on, and their data to be protected - no exceptions. Hear about how Secure Service Container (SSC), an IBM-exclusive open technology, enables secure building and hosting of next-generation applications, both cloud and on-premises. SSC protects the full stack from external and insider threats, allows automatic encryption of data in-flight and at-rest, and is tamper-resistant during installation and runtime – with no...
While some developers care passionately about how data centers and clouds are architected, for most, it is only the end result that matters. To the majority of companies, technology exists to solve a business problem, and only delivers value when it is solving that problem. 2017 brings the mainstream adoption of containers for production workloads. In his session at 21st Cloud Expo, Ben McCormack, VP of Operations at Evernote, will discuss how data centers of the future will be managed, how th...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that Mobile Create USA will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Mobile Create USA Inc. is an MVNO-based business model that uses portable communication devices and cellular-based infrastructure in the development, sales, operation and mobile communications systems incorporating GPS capabi...
SYS-CON Events announced today that MIRAI Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MIRAI Inc. are IT consultants from the public sector whose mission is to solve social issues by technology and innovation and to create a meaningful future for people.
SYS-CON Events announced today that Keisoku Research Consultant Co. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Keisoku Research Consultant, Co. offers research and consulting in a wide range of civil engineering-related fields from information construction to preservation of cultural properties. For more information, vi...
SYS-CON Events announced today that Interface Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Interface Corporation is a company developing, manufacturing and marketing high quality and wide variety of industrial computers and interface modules such as PCIs and PCI express. For more information, visit http://www.i...
SYS-CON Events announced today that Fusic will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Fusic Co. provides mocks as virtual IoT devices. You can customize mocks, and get any amount of data at any time in your test. For more information, visit https://fusic.co.jp/english/.
With the rise of DevOps, containers are at the brink of becoming a pervasive technology in Enterprise IT to accelerate application delivery for the business. When it comes to adopting containers in the enterprise, security is the highest adoption barrier. Is your organization ready to address the security risks with containers for your DevOps environment? In his session at @DevOpsSummit at 21st Cloud Expo, Chris Van Tuin, Chief Technologist, NA West at Red Hat, will discuss: The top security r...
SYS-CON Events announced today that TMC has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo and Big Data at Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Global buyers rely on TMC’s content-driven marketplaces to make purchase decisions and navigate markets. Learn how we can help you reach your marketing goals.
SYS-CON Events announced today that Enroute Lab will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enroute Lab is an industrial design, research and development company of unmanned robotic vehicle system. For more information, please visit http://elab.co.jp/.
Why Federal cloud? What is in Federal Clouds and integrations? This session will identify the process and the FedRAMP initiative. But is it sufficient? What is the remedy for keeping abreast of cutting-edge technology? In his session at 21st Cloud Expo, Rasananda Behera will examine the proposed solutions: Private or public or hybrid cloud Responsible governing bodies How can we accomplish?
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.