Governance of Financial Institutions

The Findings of the November 4, 2009 Colloquium at The University Club New York, NY

On November 4, 2009, fifty-one prominent men and women from international financial institutions, major accounting and law firms, academia, media, and research and policy institutions, gathered at The University Club in New York City for a colloquium entitled “Governance of Financial Institutions.” The participants included twenty-one current or former regulatory officials, seventeen of whom have chaired or now chair government agencies that regulate financial institutions. The participants came from the United States, England, Germany, and France; several had significant experience with financial institutions in China and Japan. They met in plenary session and listened to moderated panels and presentations. They examined policies, approaches, and strategies aimed at improving the governance of financial institutions both in the United States and elsewhere.

The colloquium was conceived of by Roderick M. Hills, Partner, Hills Stern & Morley and former Chairman of the SEC, and cosponsored by the Institute of International Finance (IIF), the Hills Program on Governance at the Center for Strategic and International Studies, and The American Assembly of Columbia University.

The participants heard two formal addresses: one, on the eve of the colloquium by Paul A. Volcker, Chairman, President’s Economic Recovery Advisory Board; and another, during the colloquium, by Judge Richard Posner, U.S. Court of Appeals for the Seventh Circuit. The speakers were introduced by Richard D. Parsons, Chairman, Citigroup and Robert Denham, Partner, Monger,Tolles & Olson LLP, respectively.

The topics of the moderated panel discussions were:

  • Board Structure and Accountability,
  • Risk Management and Oversight,
  • Executive Compensation, and
  • The Role of Regulators, Authorities, and Investors in Shaping Corporate Governance in Financial Institutions.

The names of the moderators, panelists, and commentators as well as the specific issues that they addressed can be found at the end of this report. We are grateful to each of our presenters for their valuable intellectual contribution and especially to the moderators, each of whom guided a discussion among the panelists, commentators, and participants, on which this report is based. It should be understood that this report is our best reflection of what was discussed at the meeting, and, while the meeting was intended to advance debate rather than come to specific conclusions or recommendations, it is our hope that the report will be the impetus for further discussion and study.

The text of this report, along with copies of the background reading, photographs of the colloquium, and other related material, is available on the web sites of the three cosponsoring organizations.The web addresses are listed on the back cover of this report.

The cosponsors wish to acknowledge IIF’s Rakhi Kumar, the Assembly’s Terry Roethlein, and the Hills Program’s Gerald Hyman, who were instrumental in the administration of the colloquium. They also are grateful to Maha Atal for her valuable assistance in the preparation of this report. Neither The American Assembly, nor the Institute of International Finance, nor the Hills Program on Governance take a position on subjects presented here for public discussion. Comments by the panelists and participants were on a not-for-attribution basis. Participants spoke for themselves and not for the organizations with which they are affiliated. It should also be noted that the five current regulators who participated in the colloquium did so not in an official capacity but as individuals. Their participation should in no way be construed as an endorsement of this report or its findings.

The American Assembly, the Hills Program on Governance, and the Institute for International Finance wish to gratefully acknowledge the generous support of the sponsors of the colloquium: Deutsche Bank AG, HSBC, Ernst and Young, and Cleary, Gottlieb, Steen & Hamilton LLP.

CSIS Hills Program on Governance, Institute of International Finance, and The American Assembly