[...]... directives If the board is concerned that the holding company is engaging in practices that either 26 THE DIRECTOR’S BOOK • THE ROLE OF A NATIONAL BANK DIRECTOR may harm the bank or are otherwise inappropriate, the board should notify the holding company and discuss modifications If the holding company’s board does not respond to the bank’s concerns, the bank’s board should dissent on the record and... as the primary regulators of insurance, securities, and commodities activities, respectively 5 18 See footnote 4 THE DIRECTOR’S BOOK • THE ROLE OF A NATIONAL BANK DIRECTOR II � THE BOARD’S RESPONSIBILITIES � ESTABLISH AN APPROPRIATE CORPORATE CULTURE � HIRE AND RETAIN COMPETENT MANAGEMENT � BE AWARE OF THE BANK’S OPERATING ENVIRONMENT � MAINTAIN AN APPROPRIATE BOARD STRUCTURE � MONITOR OPERATIONS �. .. in the best interest of the bank For its part, the primary duty of the subsidiary bank’s board of directors is to protect the bank The bank’s board must carefully review holding company policies that affect the bank to ensure that they adequately serve the bank The board is responsible for either approving or recording its lack of approval of holding company directives that affect the bank and then... managed, the OCC works with the board and bank management to determine necessary corrective action THE BOARD AND OTHER REGULATORS The boards of directors of national banks may have occasion to contact federal bank regulatory agencies other than the OCC, namely, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC) The following table summarizes the primary... disapprove the nomination of a proposed director In addition to the citizenship and residency requirements contained in 12 USC 72, the qualifications of a candidate seeking to become a member of the board of directors of a national bank include □ Basic knowledge of the banking industry, the financial regulatory system, and the laws and regulations that govern the operation of the institution 4 THE DIRECTOR’S. .. up-to-date on developments in the financial services industry The board should develop a management succession policy to address the loss of the CEO and other key executives This policy should 22 THE DIRECTOR’S BOOK • THE ROLE OF A NATIONAL BANK DIRECTOR identify critical positions and qualified potential, including interim, replacements If no individual in the bank is suitable, the succession policy should... problem promptly, the bank must file a notice with the OCC about proposed new directors before they can serve on the board The OCC also may object to proposed directors of new banks during the first two years the bank is in business When prior notice is required, the OCC conducts background checks and reviews the biographical and financial information submitted by the proposed director The OCC has 90... a six-month extension THE DIRECTOR’S BOOK • THE ROLE OF A NATIONAL BANK DIRECTOR 17 Bank boards also should be aware that certain activities may be subject to regulation by other entities.5 The Gramm-Leach-Bliley Act codified the concept of “functional regulation,” recognizing the role of the state insurance commissioners, the U.S Securities and Exchange Commission (SEC), and the U.S Commodities Futures... business or professional relationship (other than stock ownership and the directorship itself ) with the bank or its management Additional requirements for meeting the independence standard are required by the Sarbanes-Oxley Act for public banking companies and by 12 CFR 363 for larger banking companies 2 THE DIRECTOR’S BOOK • THE ROLE OF A NATIONAL BANK DIRECTOR 3 the bank plans to offer new products... large constituency of customers or communities that are not otherwise represented on the board A bank may use advisory directors in the following situations: □ When the operations of the bank are geographically dispersed and the board wants input from more segments of the communities served by the bank □ When the board itself is small and the directors want direct involvement with a broader array of . I  THE BOARD OF DIRECTORS IMPORTANCE OF THE BOARD BOARD COMPOSITION THE BOARD AND THE OCC THE BOARD’S ROLE IN RISK MANAGEMENT THE BOARD AND OTHER. tailor their implementation of the guidance in this book to reflect the size, scope of operations, and risk profile of the bank on whose board they serve.