BANK OFFICER AND DIRECTOR LIABILITY UNDER FIRREA - THE NEED FOR A NATIONAL STANDARD OF GROSS NEGLIGENCE

Does a simple negligence or gross negligence standard apply to directo rs and officers of financial institutions in actions brought against t hem under FIR-REA? The authors analyze the statute in the light of the leading judicial decisions on the issue. Currently, a majority of cou rts uphold a simple negligence standard although the authors find the minority decisions to be equally well-reasoned. If the majority view p revails, the authors argue that bank officers and directors will find it increasingly difficult to defend any business decisions made or act ions taken. To prevent this, the authors recommend the adoption of a n ational gross negligence standard of liability.