In 2025, Bank of America was ordered by a federal judge to pay $540.3 million to the Federal Deposit Insurance Corporation (FDIC) in a protracted legal dispute stemming from allegations that the bank underpaid deposit insurance premiums. This lawsuit, initiated by the FDIC in 2017, accused Bank of America of violating a 2011 federal rule designed to enhance the assessment of deposit insurance by requiring banks to report risk exposure at the consolidated entity level. The bank allegedly reported only direct exposures, omitting those related to subsidiaries or affiliates, which resulted in lower premium payments.
Background and Legal Basis
The FDIC’s 2011 rule replaced the earlier risk category system with a scorecard method to capture counterparty risk more accurately, especially for large, complex institutions like Bank of America. The rule mandated aggregation of exposures across all entities within a corporate family to calculate deposit insurance assessments. After audits, the FDIC claimed that Bank of America failed to comply by excluding certain exposures and thereby underpaid premiums from 2012 to 2014.
The agency sued the bank seeking over $1.12 billion in unpaid assessments, alleging unjust enrichment due to the underpayment. Bank of America challenged the rule’s validity as arbitrary and conflicting with the Federal Deposit Insurance Act (FDIA), also raising procedural and statute of limitations defenses.
Court Ruling and Judgment
U.S. District Judge Loren AliKhan ruled against Bank of America, upholding the FDIC’s 2011 rule as a lawful exercise of authority. The court found that Bank of America had fair notice of its obligations and that the FDIC’s method was reasonable, dismissing claims that the rule was arbitrary or capricious.
However, the court limited the claims to those from the second quarter of 2013 through the end of 2014, finding that earlier claims were time-barred under the FDIA’s three-year limit for filing suit. Consequently, the judgment amount was reduced to $540.3 million plus accrued interest, reflecting the timely assessment periods.
Bank of America denied any intent to evade payment and stated it was pleased with the decision, noting it had set aside reserves to cover the ruling.
Legal and Industry Implications
- The case highlights the FDIC’s enhanced regulatory role post-2008 financial crisis to ensure robust deposit insurance funding and banking sector stability.
- It clarifies that banks must fully comply with detailed rules regarding risk exposure reporting at the corporate group level.
- Bank of America’s loss signifies increased scrutiny and legal risk for large financial institutions under complex regulatory frameworks.
- The ruling emphasizes that courts will hold banks accountable when rules—even new or complex ones—are reasonably clear and grounded in statutory authority.
Frequently Asked Questions
What was Bank of America sued for in this FDIC case?
Bank of America was sued for underpaying deposit insurance premiums by failing to report consolidated counterparty exposures as required by a 2011 FDIC rule.
How much does Bank of America have to pay?
The court ordered a payment of $540.3 million covering underpaid assessments from Q2 2013 to the end of 2014, plus interest.
Did Bank of America admit wrongdoing?
No. The bank denied any intent to evade payments and accepted the ruling while maintaining challenges to parts of the case.
What is the significance of this ruling for other banks?
It reinforces obligations to comply with FDIC rules fully and signals courts’ willingness to enforce regulatory assessments rigorously.
Is this lawsuit fully resolved?
As of mid-2025, the main judgment has been issued, with Bank of America reflecting the decision in its financial reserves. Further appeals or proceedings are not publicly reported.
Conclusion
The Bank of America FDIC lawsuit marks a significant enforcement action ensuring that large banks pay their fair share to the national deposit insurance fund. By upholding detailed regulatory reporting requirements, the case bolsters the financial system’s resilience. For Bank of America, the $540 million judgment underscores the cost of regulatory non-compliance amid ever-tightening post-crisis bank oversight. This legal precedent signals that transparency and accurate risk reporting are critical legal and financial obligations for all federally insured banks going forward.
