“Bob Fenner [NCUA’s General Counsel] opined that the WesCorp board of directors has no indemnity. What does that mean? It means that all of our volunteers who claim indemnity under a board resolution (that is most of our volunteers) have no indemnity. That means whenever the NCUA comes in and takes over a credit union that any board member loses his indemnity and has to dig into his own pockets to defend himself.”
He worries that if “directors do not have indemnity, then who will serve?”
Henry, welcome to the world that bank directors have lived under for the last twenty years. Bank directors can be held personally liable for losses when a bank fails. FDIC writes that “[l]awsuits against former directors and officers of failed banks result from a demonstrated failure to satisfy the duties of loyalty and care.” See FDIC’s Statement Concerning the Responsibilities of Bank Directors and Officers.