Big Bank Boards

Résumé du livre

Traditional mechanisms for monitoring management behavior in the form of shareholder derivative claims of breach of fiduciary duty are not well suited to the task of monitoring bank managers' effectiveness in ensuring banks' safety and soundness. Moreover, the power of bank regulators to address lax management through administrative enforcement powers is limited, especially when evaluated in the context of Congress' vision, as reflected in the passage of Dodd-Frank, of enhanced supervision of large banks. In particular, the fact that negligent or grossly negligent behavior does not implicate the agencies' power to remove a bank director undermines Dodd-Frank's system of enhanced supervision of large banks. This article considers big bank director liability in the context of the enhanced supervisory regime and uses the JPMorgan London Whale debacle to illustrate the importance of strong administrative enforcement.