If you’re on the board of a community bank, whatever you do, don’t carry too much E&O insurance, and definitely don’t make the mistake of being rich:
The FDIC’s Mr. Osterman said the agency looks at the level of insurance coverage available, as well personal assets, in deciding whether to bring a lawsuit, he said. The FDIC will generally sue outside directors only if it thinks their actions are grossly negligent, a significantly more lenient standard than the negligence test applied to bank executives.
Actual level of purported negligence on the part of directors is presumably a secondary consideration in deciding whether to go after them. . . . Yet the FDIC’s Osterman tells the Journal that the agency is “very careful in bringing claims against outside directors because we don’t want to have a chilling effect on good people serving on boards.” Yes. Of course you don’t. The Journal says the FDIC has authorized lawsuits against 158 directors and officers of failed banks, and has already sued six officers and directors of the 351 banks that have gone under since 2007. Seems a tad trigger-happy, doesn’t it? Why anyone would sit on the board of a community bank is beyond me. . . .