OTS Issues Bulletin Amending Board Oversight Guidance

The OTS issued a Regulatory Bulletin ("Bulletin 37-5") amending its examination guidance on the oversight duties of a thrift’s Board of Directors. Bulletin 37-5 provides a new general description of the duties of the Board, listing, among other things, the Board’s duty to: (1) establish business goals and strategies; (2) establish a strong compliance program; (3) establish appropriate committees with written charters; and (4) ensure affiliate transaction compliance. Regulatory Bulletin 37-5 also highlights the need for a compliance officer with direct access to the Board. Moreover, the Board must justify and approve contracts with third parties, and risk management policies also should apply to those arrangements. Regulatory Bulletin 37-5 also contains a new discussion on Board composition, including that (1) a majority of the Board should meet specified independence requirements; and (2) no more than two directors should be from the same immediate family. Regulatory Bulletin 37-5