The site in question is an 8 year old ecommerce site and we have a "Resources" link on every page which links to our links directory. Every one of those links is a reciprocal link exchange with relevant, quality websites that has been acquired over the years.
Is this a bad idea after Panda and Penguin? Should we simply remove the directory to regain some of our rankings?
I'm doing some of that for a number of my sites. Not deleting all of them but quite a few and those I leave, I'm removing keyword anchor text in favor of brand only name. I'm seeing some sites get a bump in rankings. At the very least, you're falling more in line with Google guidelines about link schemes... so probably a good thing.