Financial institution of America is ready 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 towards BofA for allegedly failing to pay $1.12 billion in necessary charges between Q2 of 2013 and This autumn of 2014.
The FDIC additionally accused BofA of unjustly enriching itself by retaining the cash.
In keeping with the lawsuit, BofA did not precisely report its counterparty exposures, resulting in decrease danger 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 stage 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 accurately interpreted rules 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 reducing the declare in half.
In keeping with Alikhan, the rule is legitimate and that the FDIC was proper to go after BofA’s underpaid deposit insurance coverage charges. Nevertheless, the choose says BofA has to pay over $540.26 million plus curiosity as a substitute 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 capable of ‘determine[] with ascertainable certainty, the requirements’ it was anticipated to use.”
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