As uncertainty continues to loom over the U.S. economy, the regulatory and legal climate for the financial sector has been radically altered.

Large or small, it is imperative that board members and management of financial institutions be proactive, employ a different way of thinking and consider innovative approaches toward survival and success in these extraordinary challenges. While no one can predict the timing of the economic cycle turn for the better, the first step toward regaining the confidence of investors is for directors and management of U.S. commercial and investment banking institutions to work as closely as possible with industry regulators, embracing a culture of proactive communication and transparency.

Too often in recent months, troubled financial institutions have tried to instill confidence in regulators, employees, investors, depositors and the general public, while executives wrangle behind the scenes to untangle an unwieldy mess, only to fail. It's clear that regulators won't be keen on any more surprises and certainly don't appreciate being embarrassed in front of Congress. In these times, regulators are more likely to accept a risky or innovative idea by an institution if it has shown its cards.

Thus the supervisory process between the bank and the regulator can be managed to produce several effective results, including: reducing the impact of regulatory risk; lessening the compliance burden; and decreasing the volatility of adverse regulatory findings that manifest through enforcement actions and other measures. Here are some tips:

Initiate fluid and ongoing communication: No longer is it an option to conduct business as usual, sit back and await the formal compliance examination by your regulator. Act with transparency and take an aggressive approach to maintaining ongoing contact. Any time there are changes or new developments that have a material impact on any component of the bank's condition, market perception or risk profile, the regulators should be alerted.

Take a deep dive: While grappling to regain capital, dive deeply into your balance sheets, particularly the loan and investment portfolios. Take a full assessment of all liabilities and assets. Make honest assessments to eliminate the chance of surprises.

Prioritize: Dealing with piles of paperwork and responding to regulator enforcement documents is a large undertaking overlaid on daily operational tasks and serving edgy depositors. Determine the best approach to fulfill these duties.

Ensure capable leadership: These unprecedented times call for ethical, qualified, seasoned, involved and engaged executive leadership. Ensure that the senior management team comprises the right people, trusted and capable of steering the ship during difficult times. Support from outside financial advisers who can offer a unique perspective and have experience dealing with crisis situations may also be required.

Unfortunately, things are likely to get worse before they get better, but the best chance of stabilizing the economy lies in the restoration of confidence and trust among investors and the general public in individual institutions. Washington's bailout effort is one small step toward that goal.

However, it's going to take willingness on someone's part, outside of the U.S. government, to begin investing in the marketplace again.

Institutions that show they are willing to begin using their pent-up liquidity, moving into the market and making sound investments, have a chance to benefit significantly -- not only financially, but by building a reputation as an organization with vision and a commitment to the future. While that may not happen in the immediate term, a forthright attempt to work hand in hand with regulators while being transparent with them and all other outside constituents, is the first step. These efforts, coupled with the unprecedented actions of the U.S. government, are all steps that should spawn tangible and positive outcomes.

Just as it makes sense to develop a strategy for business success, the implementation of a robust and continuing regulatory strategy is necessary now and should become part of every insured institution's system even when times get better.

Samuel P. Golden is a managing director and head of the Financial Industry Advisory Services Group at Alvarez & Marsal Holdings LLC. He was formerly the ombudsman for the Office of the Comptroller of the Currency.