On October 3, 2023, the Federal Deposit Insurance Corporation
(FDIC) approved proposed guidelines establishing standards for
corporate governance and risk management for covered institutions
with total assets of $10 billion or more (Proposed Guidelines). The
Proposed Guidelines were approved by a vote of 3 – 2, with
Chairman Gruenberg and Directors Chopra and Hsu voting in favor of
the proposal and Vice Chairman Hill and Director McKernan voting
against it.
The Proposed Guidelines would provide standards for corporate
governance and risk management for covered institutions, including
standards outlining the general obligations and duties of the board
of directors, expectations for board composition and board
committee structures and responsibilities, and expectations for the
establishment of an independent risk management function
incorporating a three lines-of-defense model.
The Proposed Guidelines were prompted by the FDIC’s
observations that financial institutions with poor corporate
governance and risk management practices were more likely to fail.
In the view of the FDIC, the three lines-of-defense model, together
with the proposed, expanded duties and oversight of…
