Question

At the request of the board of directors, bank counsel has determined that the plan language governing its common trust fund is vague and does not incorporate the requirements of the pre- 1997 version of OCC Regulation 9. Therefore, management has been advised to amend the language to properly reflect the current version. Before granting its approval, what should the board of directors ensure does not result from this amendment?

a. That the bank recovers the costs associated with amending the plan.
b. It does not leave the bank is a less competitive position.
c. That the cost of amending the plan is not charged to the fund.
d. None of the above.

Answer 1

The board of directors should ensure that the costs of amending the plan are not charged to the fund and that it does not competitively disadvantage the bank.

Step-by-step explanation:

Before granting approval for the amendment to the common trust fund language, the board of directors should ensure that the cost of amending the plan is not charged to the fund. This is to prevent the depletion of the trust assets and maintain the fiduciary responsibility owed to the clients. Additionally, the board should verify that the amendment does not position the bank competitively disadvantageously nor incur needless costs for the bank that could have been avoided.