Finally. Citigroup ( C) is bringing new blood to its board of directors and plans to name four nominees next week, according to the Wall Street Journal. This should have happened a long time ago. It is high time the boards of major financial institutions became engaged in the kind of oversight they are supposed to provide. If current boards aren't doing their jobs, then new board members are needed. Apparently, Citigroup will bring in two former banking executives and two other financial experts, possibly a former Pimco investment manager, the Journal reported. I understand the desire to have banking expertise on the board, but I worry that might deliver more of the same nepotistic tolerance we've seen in the past. Two non-banking financial board members may not be enough. It's time for real change at Citi and every other financial institution. The board needs more bite! In the case of most banks, it's clear that the boards have long been asleep, content to let management run amok. They need to remember who they work for - shareholders! Share values have tanked while they dithered. The collateral damage to other companies and the overall economy is frightening. Sadly, the pool of trustworthy defenders of the institutions and their investors seem to be in short supply. I hope there are enough for all the other banks and insurers like Bank of America ( BAC), AIG ( AIG), JPMorgan Chase ( JPM)and Wells Fargo ( WFC). The list of banks that might benefit from more active board involvement is much longer, but those are the ones that received the most government bailout money and that's as good a proxy for past malfeasance as we have.
Some may counter that not all banks that received bailout money needed it or wanted it, and that some were pressured to take the funds as part of the government's push to get more money into the credit system. True or not, I think the boards of just about every major financial institution are in need of a shakeup. Board appointments are not meant to be cozy pastures for retirees or favors among friends. These are real jobs with real work that needs to be done. It's time for all company boards to step up.