Banking Regulator Sues Bank of America Over Unpaid Deposit Protection Insurance
A banking regulator on Monday sued Bank of America (BAC) over $542 million in deposit insurance that it said the second-largest U.S. bank “refuses to pay.”
The Federal Deposit Insurance Corporation (FDIC) charges banks a fee to protect customer deposits. The largest financial companies must pay more for that protection.
“Bank of America underreported its counterparty exposures by tens of billions of dollars,” the complaint filed in federal court in Washington said.
Specifically, the FDIC points to “counterparty risk” or the danger that another leading financial firm could fail and cost Bank of America. No other leading lender has understated its counterparty risk as did Bank of America, the complaint said.
Lawyers for the bank said they expected to prevail in court.
Michael Krimminger, a lawyer for Cleary Gottlieb who is representing the Charlotte-based bank, said the dispute concerned the interpretation of technical rules governing the insurance fund.
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“In my view, the FDIC’s position in this instance is erroneous,” he said.
The FDIC declined to comment.