Bank of America and FDIC to Clash Over $1.1B Deposit Insurance Underpayment
Bank of America and the FDIC will meet in federal court on Tuesday to argue over an alleged $1.1 billion underpayment in deposit insurance premiums. The case, which has been ongoing for six years, centres around the FDIC's 2011 rule and the bank's claims of procedural violations.
Bank of America argues that the FDIC's 2011 rule was unclear, and it violated the Administrative Procedure Act during its rule-writing process. The FDIC, however, alleges that the bank improperly calculated its exposure to large banks, making it appear less risky and paying lower assessments than required.
The case, originally filed in 2017, initially claimed underpayments of $542 million. However, an amended complaint expanded the time frame, increasing the alleged underpayment to $1.1 billion. The case has been overseen by three magistrate judges and delayed due to factors including COVID-19.
On Tuesday, Magistrate Judge Moxila Upadhyaya will hear oral arguments and issue a report and recommendations. The final ruling will be made by Judge Emmet Sullivan.
The outcome of this case will have significant implications for both Bank of America and the FDIC. If the FDIC's allegations are proven, the bank could face a substantial financial burden. Conversely, if Bank of America's arguments prevail, it could set a precedent for future cases involving the FDIC's rule-writing process.
