Congratulations on John F. Lawrence's column on banking regulation. At the same time, there is one aspect of the overall banking problem, one that is especially prevalent among banks with less than $1 billion in assets, which you failed to mention: the selection and responsibilities of the board of directors.
It is my experience as a consultant to community banks that most of those with the problems so aptly identified in the column arrived there due to large loans approved by the senior loan committee or the loan committee of the board. Both of these bodies consist of board members, because of state and federal banking regulations.
Unfortunately, most of the board members are selected because they are good and trusted friends of the chairman or the president and are not expected to give the top executives a lot of grief at every board meeting.
As the directors of a community bank, many of these board members are meant to be representative of their community, i.e. dentists, brain surgeons, lawyers--anyone so long as they have no proven track record in analyzing and evaluating major bank credits.