"Providing credible challenge means you are informed, and that you also realize you have a fiduciary duty to the community and the employees," Brosnan says. "If they are just going to say 'yes,' then they have failed. They have to be informed, invest the time and then ask the right questions."
Brosnan says directors must demand "information" rather than allowing themselves to be overwhelmed by raw data. They must insist that time is set aside during meetings for genuine discussion, and they have to speak up when they disagree with the CEO. Finally, directors should ensure that the chief risk officer and the chief auditor are flagging matters that require their attention.
"It's a lot of work," Brosnan concedes. "Their hourly wage is probably a bit less than mine."
The OCC is not trying to create an adversarial relationship between a bank's senior management and the board, he says. But it does want some "tension."
"The CEO is the chief executive officer, but they work for the board, and sometimes that got lost in growing their banks," Brosnan says. "CEOs are human. That person can make great decisions and bad ones — no matter who it is. That's why you need the checks and balances" that a board provides.
The OCC figures 14 of the 19 banks are still 12 to 24 months away from having a board of directors that is exercises the proper oversight. Two are there today and three more are within a year of reaching this goal.
The agency is taking a close look at talent management, too, and much of that focus is on succession planning. Does the company have a deep bench? Does it know whom it plans to promote to key jobs? Not a single bank has met the OCC's expectations in this area, but 12 are getting close; seven banks are still 12 to 24 months away.
"The bar we put out there is high. You can't just be OK. We want you to be really good," Brosnan says. He was quick to acknowledge another factor holding banks back: examiners are loath to say a bank has met all the criteria for fear they will stumble and the examiner's judgment will be called into question.
Brosnan says he is working "to get my guys culturally comfortable with that. They are inherently reluctant to call somebody a 1-rated bank or strong," he says.
Finally, the OCC wants to be sure these large banks are defining their risk appetites and communicating that to employees. The biggest hurdle here is rolling risk up to an enterprisewide level. Someone, likely the chief risk officer, should be able to walk the board through the collective risks facing the bank, Brosnan says.
Two of the 19 banks have met the OCC's standards here, while eight more are within 12 months and nine banks are still 12 to 24 months away.
While some large-bank executives argue privately that the OCC is being too intrusive, Brosnan is confident everyone is on the same page.
"They are totally serious. I haven't yet found any of those independent directors or any CEO or the CEO's direct reports who disagree with this being the right course of action," he says. "What they want from us is to make it clear where we think they have gaps and give them some credits for the wins."
Brosnan, 54, has spent most of his working life at the OCC, joining the agency in 1983 as an examiner in Miami. Twenty years later he reached the pinnacle of the exam corps: senior national bank examiner.
He left the agency in 2004 to join MBNA to run its operational risk management. MBNA was bought by Bank of America in 2005, which was ironic as Brosnan had once been B of A's examiner-in-charge. Brosnan rejoined the OCC in 2008 and was promoted in 2010 to his current post, senior deputy comptroller for large banks.
In many interviews over the years, he's always been pretty blunt. He rarely hedges, starting most of his answers with a confident yes or no. He's earnest, passionate and intensely interested in getting supervision right. But perhaps the most striking thing about Brosnan is his optimism.
"They are going to get this right," he says.