The Corporate Governance of Banks

[...]We begin with an overview of the topic of corporategovernance and proceed to a discussion of the particularcorporate governance problems of banks. We embrace the viewthat a corporation is best defined as a complex web or “nexus”of contractual relationships among the various claimants to thecash flows of the enterprise.5 The defining principle ofAmerican corporate governance is that an implicit term of thecontract between shareholders and the firm is that the duty ofmanagers and directors is to maximize firm value forshareholders. The legal manifestations of these contracts arethe fiduciary duties of care and loyalty that officers anddirectors owe to shareholders.[...]