Given banks’ recent travails, their boards have come in for plenty of criticism. In a new report, Moody’s wonders whether boards at large banks featured enough financial industry experts to “ask the right questions and appropriately challenge management.”

The ratings agency looks at the boards of 20 large American and European banks before and after the credit crunch. In Moody’s mind, the more independent non-executive directors with financial-industry experience, the better. On average, boards have added four new members since the crisis began. These additions bring more financial experience than their predecessors; around half of independent board members now boast financial experience, up from a third in 2007.

This is a good thing according to Moody’s, but in itself it is unlikely to make banks sounder at a stroke. After all, as Lex points out, sometimes non-experts ask the most pertinent questions. More plumbers on boards, for example, might have asked, “Hey, what happens if house prices actually fall?”

Advertisements