Banks, State Regulators Slam FDIC’s Bank Board Director Proposal

Banks and an unexpected ally—state bank regulators—are rejecting a proposal from the Federal Deposit Insurance Corp. to increase board directors’ risk-management responsibilities following a series of bank failures last year.

The FDIC wants to require bank board directors to manage the risk profile of their financial institutions and minimize potential conflicts of interest among board members. But that would clash with state corporate governance laws and create a potential unequal playing field for banks overseen by other federal regulators, the Conference of State Bank Supervisors said in a comment letter last week.

The state bank regulators’ letter echoed comments from ...