Daniel K. Tarullo of the Board Of Governors of the Federal Reserve System delivered a speech on the intersection of corporate governance and prudential regulation.  Some of the points he noted were (emphasis added):

“While regulators should have clear expectations for boards, we need to make sure that we are creating expectations that lead to boards spending more time overseeing the risk-management and control functions I have emphasized this afternoon. There are many important regulatory requirements applicable to large financial firms. Boards must of course be aware of those requirements and must help ensure that good corporate compliance systems are in place.”

“Specifically, the question arises as to whether the fiduciary duties of the boards of regulated financial firms should be modified to reflect what I have characterized as regulatory objectives. Doing so might make the boards of financial firms responsive to the broader interests implicated by their risk-taking decisions even where regulatory and supervisory measures had not anticipated or addressed a particular issue. And, of course, the courts would thereby be available as another route for managing the divergence between private and social interests in risk-taking.”

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