EddieJayonCrypto
19 Apr 25
Bank of America will pay over $540 million after a judge ruled it underpaid deposit insurance fees for more than a year. The FDIC sued BofA in 2017 for failing to pay $1.12 billion in fees from 2013 to 2014, accusing the bank of misreporting exposures to lower risk scores and insurance payments. Bof...
Bank of America has been ordered to pay over $540 million after a judge upheld the majority of the FDIC’s lawsuit accusing the bank of underpaying deposit insurance fees. The case revolves around allegations that Bank of America misreported exposures to lower risk scores, leading to unjust enrichment by avoiding higher insurance payments.
The FDIC’s lawsuit, filed in 2017, claims BofA failed to pay $1.12 billion in fees from 2013 to 2014. The core issue centers on the bank’s failure to consolidate counterparty exposures at the ultimate parent level, which significantly reduced its risk concentration measures and, consequently, its deposit insurance assessments.
Bank of America contended that it had correctly interpreted post-2008 financial crisis regulations and that the FDIC’s rule interpretation was arbitrary and lacked fair notice. However, US District Judge Loren L. Alikhan dismissed most of BofA’s defenses, affirming the validity of the FDIC’s rule while reducing the payment amount roughly by half.
Judge Alikhan emphasized that the bank should have been able to clearly understand the standards set forth by the 2011 rule, and thus, is liable for the underpaid fees plus interest. This ruling underscores the importance of transparent risk reporting and regulatory compliance in the banking sector to ensure the stability of deposit insurance frameworks.