Bank of America has been ordered to pay $540.3 million to the Federal Deposit Insurance Corporation (FDIC) following a ruling by a federal judge in a long-running legal battle over underpaid deposit insurance contributions.
The decision, issued by U.S. District Judge Loren AliKhan in Washington, D.C., and made public on Monday, covers the period from the second quarter of 2013 through the end of 2014, including interest. The ruling stems from a 2017 lawsuit in which the FDIC accused the bank of reducing its insurance payments by not complying with a 2011 rule related to risk exposure reporting.
The rule was introduced as part of broader post-crisis financial reforms aimed at strengthening the stability of the U.S. banking system following the 2008 financial crisis. The FDIC claimed Bank of America underreported its risk to counterparties, leading to lower deposit insurance assessments.
Judge AliKhan rejected the bank’s argument that the FDIC lacked a reasonable basis for the rule or had acted arbitrarily. She also ruled that the agency was not obligated to devise a flawless method for assessing risk exposure, nor was Bank of America able to claim it lacked fair notice of its obligations.
However, the judge limited the scope of the ruling, determining the FDIC waited too long to pursue claims related to periods before mid-2013.
Bank of America denied any intention to evade payments. “We are pleased the judge has ruled and have reserves reflecting the decision,” said spokesperson Bill Halldin. The FDIC declined to comment.
The partially redacted decision was issued on March 31. Bank of America is set to report its first-quarter earnings on Tuesday.
