By Bardil 
Bank of America has been ordered to pay more than half a billion dollars after a federal judge ruled that the lender significantly underpaid its deposit insurance fees over a year-long period.
In 2017, the Federal Deposit Insurance Corporation (FDIC) filed a lawsuit against Bank of America, alleging the institution failed to pay $1.12 billion in mandatory fees between the second quarter of 2013 and the fourth quarter of 2014.
The FDIC accused BANK OF AMERICA of unjustly enriching itself by retaining the funds and failing to accurately report its counterparty exposures, which led to lower risk scores and reduced insurance payments.
“In 2016, an FDIC audit revealed that [Bank of America] had not consolidated its counterparty exposures to the ultimate parent level as required… This lowered [the bank’s] concentration measure, which in turn considerably lowered the overall amount paid in assessments for those quarters,” the lawsuit stated.
BANK OF AMERICA contends that it correctly interpreted post-2008 financial crisis regulations designed to strengthen the banking system and enhance risk-based deposit insurance assessments. The bank argues that it lacked fair notice of the FDIC’s interpretation of the rule, calling the regulation itself “arbitrary and capricious and procedurally flawed.”
U.S. District Judge LOREN L. ALIKHAN rejected most of the bank’s arguments but reduced the claim amount by half. The judge ruled that the FDIC was justified in pursuing the underpaid fees, though BANK OF AMERICA is now required to pay $540.26 million plus interest, rather than the $1.12 billion initially sought by the regulator.
“The court agrees with the FDIC that, after reading the text of the 2011 Rule and ‘acting in good faith,’ [Bank of America] should have been able to ‘identify[] with ascertainable certainty, the standards’ it was expected to apply,” Judge ALIKHAN stated.
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