Bank of America to Pay $540.3 Million After Ruling in FDIC Lawsuit

Bank of America will reportedly pay $540.3 million following a judge’s ruling in a lawsuit in which the Federal Deposit Insurance Corp. (FDIC) accused the bank of paying less than it owed for deposit insurance.

The judge’s decision was made public Monday (April 14), Reuters reported Monday.

The FDIC sued Bank of America for $1.12 billion in 2017, alleging that the bank failed to honor a 2011 rule that changed how banks report risk exposure to counterparties and thereby reduced its deposit insurance contributions, according to the report.

Bank of America denied that it attempted to evade payments, the report said.

The judge ruled against the bank’s claims that there was no reasonable basis for the rule, saying that the FDIC was not required to develop a “perfect measure” of predicting banks’ potential exposure to losses, per the report.

However, the judge also ruled that the FDIC filed its lawsuit too late to make claims before the second quarter of 2013, so the amount the bank was ordered to pay covers assessments from the second of 2013 through the end of 2014, according to the report.

Bill Halldin, a Bank of America spokesperson, said in the report: “We are pleased the judge has ruled and have reserves reflecting the decision.”

This decision came at a time when the FDIC, like other regulatory agencies, is being rapidly reshaped.

The FDIC’s new acting chairman, Travis Hill, said at the start of the new administration in January that he would “conduct a wholesale review of regulations, guidance and manuals” and “adopt a more open-minded approach to innovation and technology adoption, including (1) a more transparent approach to FinTech partnerships and to digital assets and tokenization, and (2) engagement to address growing technology costs for community banks.”

In addition, the FDIC would seek to “encourage more de novo activity so there is a healthy pipeline of new entrants in the banking sector,” Hill said.

In March, the FDIC provided new guidance saying that FDIC-supervised institutions can engage in crypto-related activities without receiving prior FDIC approval, provided they adequately manage the associated risks.

Previously, under a guidance that is now rescinded, the FDIC required prior notification of those activities.