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WASHINGTON -- The Federal Home Loan banks could take a more active role in selecting candidates for their boards under a proposal the Federal Housing Finance Board issued Wednesday. Current [...]

Attracting competent bank directors can be difficult for small banks because directors receive little pay but are financially liable for the bank's management. Banks should avoid directors who are trying to attract business for their accounting or law practices and should seek out intelligent people who are willing to work to prepare for meetings. In return, banks should share information freely with their directors. An education in economics and an insider's view of the local community are often the job's most valuable rewards., In two recent columns, I've written about the makeup of bank boards. Community banks, it seems, prefer active people -- local entrepreneurs -- and sometimes struggle to find a politic [...]

Banking industry officials and analysts report mixed success in hiring bank directors as a result of increased liability exposure. David Rea of California Financial Holding Co and William J. Cardew of Merchants Bank of New York report having had no trouble, but both believe the problem does exist in the industry. Beatrice D'Agostino of Bancorp New Jersey Inc and Anat Bird of BDO Seidman believe that the problem is only faced by financially troubled institutions. Donald Peltier of First Interstate Bank of Southern Louisiana sees the problem as being rampant in the industry., Federal legislation has placed increased legal liabilities on bank directors. And the government and regulators have been aggressively pursuing directors and officers of failed banks and thrifts. American Banker reporter [...]