Banks Adding Ex-Government Leaders To Boards
Professor Joe Grundfest spoke with Jeff Green and Maryellen Tighe of the San Francisco Chronicle on why banks have begun adding former government leaders to their boards and how "understanding how your regulator thinks" has become just as important as understanding customers.
Wells Fargo & Co. is joining other financial firms in adding former government leaders as federal regulation increases.
Federico Pena, who had terms running the transportation and energy departments for President Bill Clinton, joined this month, expanding the largest U.S. home lender's board to 16 members. Elaine Chao, George W. Bush's labor secretary, was named in June to replace U.S. West Inc. Chairman Emeritus Richard McCormick, who stepped down after serving since 1983.
"In the financial sector, understanding how your regulator thinks, knowing how to operate profitably within the regulatory footprint is every bit as important as understanding your customers," said Joe Grundfest, a Stanford Law School professor who was a member of the Securities and Exchange Commission from 1985 to 1990. "It may be good news, it may be bad news, but either way it's the reality."