Financial institution of America is about to pay greater than half a billion {dollars} after a district choose discovered the lender massively underpaid its deposit insurance coverage charges for greater than a 12 months.
In 2017, the FDIC filed a lawsuit in opposition to BofA for allegedly failing to pay $1.12 billion in necessary charges between Q2 of 2013 and This fall of 2014.
The FDIC additionally accused BofA of unjustly enriching itself by retaining the cash.
Based on the lawsuit, BofA didn’t precisely report its counterparty exposures, resulting in decrease threat scores and decrease insurance coverage funds.
“In 2016, an FDIC audit revealed that ‘[BofA] had not consolidated its counterparty exposures to the final word guardian degree as required…’ This lowered [BofA’s] focus measure, which in flip significantly lowered the general quantity that BANA paid in assessments for these quarters.”
BofA argues that it appropriately interpreted laws that have been created after the 2008 monetary disaster to strengthen the steadiness of the banking system and improve risk-based deposit insurance coverage assessments.
The financial institution additionally claims it lacked truthful discover of the FDIC’s interpretation of the rule, calling the rule itself “arbitrary and capricious and procedurally flawed.”
US District Choose Loren L. Alikhan rejected most of BofA’s arguments whereas chopping the declare in half.
Based on Alikhan, the rule is legitimate and that the FDIC was proper to go after BofA’s underpaid deposit insurance coverage charges. Nonetheless, the choose says BofA has to pay over $540.26 million plus curiosity as an alternative of the $1.12 billion sought by the regulator.
“The courtroom agrees with the FDIC that, after studying the textual content of the 2011 Rule and ‘appearing in good religion,’ [BofA] ought to have been in a position to ‘establish[] with ascertainable certainty, the requirements’ it was anticipated to use.”
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