Does Banking Law Have Something to Teach Corporations Law About Directors’ Duties?

Abstract

In the wake of the Financial Crisis, the wave of bank failures, FDIC interventions, and FDIC suits to recoup their losses has highlighted the question of what a bank director’s duty of care is. The result has been a body of decisions, mostly on motions to dismiss, articulating standards of care that are higher than those that have been required of non-bank corporations over the last few decades. In contemporary corporations law the business judgment rule has become a practically insurmountable bar to shareholders seeking redress for bad director decisions. Maybe the corporation has moved too far from the accountability of partnership structures at the other end of the business associations spectrum. If those in charge are never responsible for the outcome of their decisions, what kind of decisions can we expect? Perhaps banking law has something to teach corporations law about the fiduciary duties of those at the helm.