The chairman of the Senate Finance Committee is expected to call for significant reforms on American University's governing board -- including the possible removal of some trustees -- after talks between the two groups failed, according to sources familiar with the discussions.

The talks, held during the past few weeks, were an attempt to quietly put to rest a review by committee staff members of the $3.75 million departure deal awarded last fall to ousted AU president Benjamin A. Ladner after the board concluded that he could be fired for cause.

Ladner was ousted in October after auditors questioned hundreds of thousands of dollars in expenditures by him and his wife, Nancy, over three years. He reimbursed the university more than $100,000 and agreed to amend tax forms to report additional indirect income from the school for services such as a personal chef.

The deal infuriated many on the private university's campus in Northwest Washington, with faculty, deans and students voting no-confidence in the board for its actions.

Sources, who declined to be identified because of the confidentiality of the proceedings, said a key reason the talks failed was that the board declined to remove some trustees who had been seen as most prominent in the decision to award the severance package.

As a result, the sources said, Sen. Charles E. Grassley (R-Iowa), chairman of the Finance Committee, will send a letter to the AU trustees within days recommending changes in governance. Grassley's committee has been investigating financial abuses in nonprofit organizations.

The recommendations are expected to include a request that board leaders oust certain members, as well as provide a stronger voice on the governing panel for faculty and students, according to the sources.

Because American University is congressionally chartered, Congress could formally step into issues of governance, but the sources said Grassley's recommendations would not be binding…