03/26/2009 05:12 am ET Updated May 25, 2011

Should Continuing Education be Mandatory for Board Members?

The financial mess that we are in is bringing to the light that many boards were unable to properly perform the oversight role they are charged to do with public companies. What happened?

In good times, oversight is easy as the proverbial tide lifts all boats. It is not until the tide goes out the Warren Buffet famously stated that we see who has been swimming naked! In this scenario, corporate boards should be playing the role of lifeguard. They are charged with setting policy, tracking compliance, monitoring risk, and evaluating performance (particularly of the CEO). However, it seems that some of these would be lifeguards have been more interested in tanning by the pool and collecting big checks than doing their jobs.

Were the Merrill Lynch, AIG, WaMu, Lehman and Citigroup boards capable of understanding the myriad of businesses, products and resulting risks these companies were engaging in? Were the boards properly qualified to direct these complicated entities. Will their D+O (Directors and Officers) Insurance protect them?

The Citigroup and WaMu boards had federal bank examiners that were also charged with review and examination to ensure compliance with existing law. How were the problems missed by both bank examiners and board members?

Is it time to require directors of publicly held companies to attend mandatory continuing education sessions like other professionals (doctors, CPA's and attorneys)? Does it make sense to test directors knowledge to ensure that they have enough content knowledge to serve in the role that they were appointed (or technically elected for)?

Note: William A. Donius was elected CEO of Pulaski Bank in 1997. He took the bank public in 1998 with Pulaski Financial Corp. NASDAQ listed PULB as the holding company. Under his leadership the bank grew from $168 million to $1.3 billion. Pulaski Bank is the largest purchase market, mortgage originator in St. Louis and one of the top three in Kansas City. Pulaski Bank was voted the Best Place to Work in St. Louis in 2007, received a Torch Award from the Better Business Bureau in 2008 and is ranked as one of the best performing smaller banks/thrifts by industry publication SNL. Donius retired from the CEO position in April of 2008 and remains Chairman of the bank. This essay represents his personal view and may represent the view of the bank.

Donius was appointed to a two-year term on the U.S. Federal Reserve Board TIAC Council in 2008. Donius served a four-year term on the Board of Directors of America's Community Bankers ending in 2007. In addition, he served as Chairman of for profit subsidiary, America's Community Bankers-Partners for two years.