APPENDIX

Section 155 of H.R. 890, the Student Loan Sunshine Act, bars a director of a college from serving on "advisory councils" of banks.  AABD believes that a bank board of directors could be construed as an "advisory council."

Section 155 also prohibits a bank from offering "gifts" to a director of a college.  "Gift" is broadly defined and may be construed as including board fees paid by a bank to its directors.  If a bank director happens to serve on a board of trustees for a college, the legislation may bar the bank from paying the director any fees or even making an arms-length loan to the director.

H.R. 890 also requires colleges participating in the federal student loan program to adopt a code of conduct that bars all appearances of conflicts of interest.  Dual service of an individual on a bank board and a board of trustees of a college could constitute an appearance of a conflict of interest.

The Private Loan Transparency and Improvement Act, the legislation reported out by the Senate Banking Committee, prohibits advisory board members of a college from receiving anything of value from a bank other than reimbursement for reasonable expenses.   Thus, a bank director who serves on a college board of trustees or in some other capacity cannot receive bank board fees from the bank for service on the bank board.