LETTER TO THE HONORABLE RICHARD C. SHELBY

Dated: June 9, 2006

VIA FACSIMILE  (202-224-5137)
The Honorable Richard C. Shelby
Chairman
Senate Committee on Banking, Housing and Urban Affairs
534 Dirksen Senate Office Building
Washington, D.C. 20510

Dear Chairman Shelby:

The American Association of Bank Directors opposes Section 702 of The Financial Services Regulatory Relief Act, S. 2856, and requests that you support its deletion prior to passage of the legislation in final form.  Section 702 permits the federal banking agencies to enforce conditions and agreements against bank directors and other institution-affiliated parties for monetary claims without proving that such persons did anything wrong.

The American Association of Bank Directors is a non-profit banking trade association representing the interests of outside bank and savings institution directors throughout the United States.

As explained in our letter of June 8, 2006 to the Honorable John C. Dugan, Comptroller of the Currency (copy enclosed) and to the heads of the other federal banking agencies, Section 702 is both unnecessary and counterproductive.  It represents an unwarranted threat of personal liability to bank directors and other institution-affiliated parties.  It will weaken the safety and soundness of the banking system by discouraging qualified persons from serving as bank directors.

Thank you for your consideration.

Sincerely,

David Baris
Executive Director

Enclosures