The Bank of America FDIC fees lawsuit revolves around a prolonged legal dispute between Bank of America and the Federal Deposit Insurance Corporation (FDIC) concerning underpaid deposit insurance assessments. This lawsuit, which began in 2017, involves allegations that Bank of America failed to comply with a 2011 FDIC rule that amended how banks report counterparty risk, resulting in reduced deposit insurance payments. This article explores the lawsuit’s background, allegations, legal claims, recent developments, consumer implications, and business consequences.
Background of the Bank of America FDIC Fees Lawsuit
The lawsuit was initiated by the FDIC in 2017, accusing Bank of America, the second-largest U.S. bank, of underreporting its risk exposures and consequently underpaying deposit insurance premiums from 2013 to 2014. The 2011 FDIC rule required banks to consolidate counterparty risk exposure at the parent entity level, but Bank of America reportedly reported only direct exposures, excluding subsidiaries and affiliates. This led to a lower assessed risk and fees owed to the FDIC, which operates the Deposit Insurance Fund that guarantees customer deposits up to $250,000 in the event of bank failure.
Parties Involved and Case Context
The plaintiffs in this case are the FDIC and, ultimately, the U.S. government protecting the Deposit Insurance Fund. The defendant is Bank of America, headquartered in Charlotte, North Carolina. This case falls within broader post-financial crisis regulatory reforms intended to bolster the banking system’s stability by ensuring accurate risk reporting and adequate deposit insurance funding.
Details of the Bank of America FDIC Fees Lawsuit Allegations or Claims
The FDIC alleges that Bank of America:
- Violated the Federal Deposit Insurance Act (FDIA) and FDIC’s 2011 risk assessment rule by underreporting consolidated counterparty exposures.
- Paid less than it was obligated to in deposit insurance premiums during the period from the second quarter of 2013 to the end of 2014.
- Misstated its exposure in a way that unjustly enriched itself to the detriment of the FDIC and the Deposit Insurance Fund.
Bank of America denied any intent to evade payments and challenged the clarity and validity of the FDIC’s rule, arguing it was confusing and that the FDIC lacked a reasonable basis for its methodology. However, the court rejected many of these defenses.
Legal Claims and Relevant Laws Involved in the Lawsuit
The lawsuit is primarily brought under:
- Federal Deposit Insurance Act (FDIA): Governing deposit insurance requirements and risk-based pricing methodologies for insured banks.
- Administrative Procedure Act (APA): Governing the regulatory rulemaking and ensuring agencies act with reasonable basis and transparency.
- Federal Contract and Banking Regulations: Regarding the reporting of risk exposure and payment obligations to the FDIC.
The FDIC sought reimbursement for approximately $1.12 billion in underpaid assessments, but the court awarded $540.3 million plus interest, limited to assessments from mid-2013 through 2014, citing statute of limitations restrictions.
Current Status and Recent Developments in the Lawsuit
On April 14, 2025, U.S. District Judge Loren AliKhan ruled that Bank of America owes the FDIC $540.3 million plus interest for underpaid deposit insurance premiums from the second quarter of 2013 through the end of 2014. The Judge upheld the validity and clarity of the 2011 FDIC rule and found that Bank of America had fair notice of its obligations. However, the Judge dismissed claims for assessments predating mid-2013 due to FDIC’s delayed legal action.
Bank of America acknowledged the ruling and has reserved funds reflecting the decision, while declining to comment on potential appeals. The FDIC declined comment. This ruling represents a significant development in an eight-year-long regulatory and legal dispute.
Health, Financial, Social, or Industry Impacts of the Lawsuit
This lawsuit significantly impacts the banking and financial regulatory landscape by reinforcing the FDIC’s authority to enforce accurate risk reporting and fair deposit insurance assessments, which underpin the stability of the U.S. banking system. Financially, Bank of America faces notable liabilities totaling over half a billion dollars, which affects its earnings and operational costs. The case also signals to other financial institutions the importance of compliance with evolving risk assessment regulations.
Consumer Advice and Business Consequences Related to the Lawsuit
For consumers, the lawsuit indirectly strengthens protections on deposits by ensuring the FDIC fund’s financial health and adequate insurance coverage against bank failures. While consumers are not parties in the suit, the court decision helps maintain confidence in banking stability.
For banking institutions, this case highlights the critical importance of regulatory compliance in reporting risk exposure and underscores legal risks involved in misreporting or underpaying insurance assessments. Banks should review their risk measurement and reporting procedures and maintain transparent communication with regulators.
Practical Recommendations
- Banks should audit and update risk reporting systems to ensure compliance with FDIC rules.
- Financial institutions must maintain documentation to substantiate exposure calculations and insurance premium payments.
- Consumers should remain informed about FDIC insurance protections and understand their rights in relation to deposit insurance.
Conclusion: Significance and Future Outlook of the Bank of America FDIC Fees Lawsuit
The Bank of America FDIC fees lawsuit is a landmark enforcement action affirming the FDIC’s ability to ensure accurate risk-based deposit insurance contributions from large banks. The ruling reinforces regulatory standards that protect the U.S. banking system’s stability and uphold the Deposit Insurance Fund’s financial integrity.
The case sets a precedent for ongoing regulatory vigilance and enforcement, with potential implications for major financial institutions’ reporting practices and legal accountability. It also contributes to consumer confidence by safeguarding the framework that insures bank deposits nationwide.
