Jonathan Stempel
(Reuters) – A federal judge ordered Bank of America to pay $540 million in a long-term federal deposit insurance corporation lawsuit accusing US banks of underpaying what they owes their deposit insurance.
In a decision released Monday, Washington, D.C., US District Judge Lauren Alican said he would pay interest in addition to his valuation from the second quarter of 2013 to the end of 2014.
The FDIC sued North Carolina-based Bank of America’s Charlotte for $1.12 billion in 2017, accusing the bank of reduced deposit insurance contributions by failing to respect the 2011 rules that changed the way banks report risk exposures to counterparties.
The rules were one of many federal reforms designed to ensure the stability of the banking system and avoid repeated 2008 global financial crisis.
In the 59-page decision, Alican rejected the Bank of America’s claim that the rules had no reasonable basis and that FDIC acted on arbitrarily and whimsical basis.
Alikhan said the FDIC does not need to develop a “complete measure” to predict potential exposure to bank losses, and that Bank of America can argue that “there is no fair notice of what it needs.”
She also said she was waiting for the FDIC to sue claims before the second quarter of 2013.
Bank of America strongly denied its intention to avoid payments.
In a statement, Bill Holding, spokesman for Bank of America, said:
FDIC declined to comment.
Alikhan announced her decision on March 31, releasing it in partially unedited form.
Bank of America is scheduled to report its first quarter results on Tuesday.
Cases include FDIC v Bank of America NA, No. of the District Court, District of Columbia. It’s 17-00036.
(Reporting by Jonathan Stempel of New York, Additional Report by Pete Schroeder of Washington, DC, Edited by Leslie Adler and Aurora Ellis)
