Finance

Bank of America ordered to pay $540 million in FDIC lawsuit in never-before-seen ruling

After a nearly decade-long lawsuit, the U.S.’s second-largest bank has been ordered to pay the Federal Deposit Insurance Corporation.

Brendan McDermid

William Allen

British journalist and translator who joined Diario AS in 2013. Focuses on soccer – chiefly the Premier League, LaLiga, the Champions League, the Liga MX and MLS. On occasion, also covers American sports, general news and entertainment. Fascinated by the language of sport – particularly the under-appreciated art of translating cliché-speak.

Update: Apr 17th, 2025 18:18 EDT

Bank of America has been ordered to hand over more than half a billion dollars to the Federal Deposit Insurance Corporation (FDIC), after a years-long legal battle over the bank’s payment of insurance premiums to the regulator.

Why has Bank of America been told to pay FDIC?

A federal judge at a court in Washington, D.C., ruled late last month that Bank of America owed the FDIC $540.3 million in unpaid deposit insurance and interest, according to court documents made public this week.

What does the FDIC do?

Founded in 1933, the FDIC protects customers’ deposits at U.S. financial institutions, operating an insurance fund that is financed “by premiums that banks and savings associations pay” for coverage, the government agency explains.

If an insured bank fails, the FDIC safeguards up to $250,000 in deposits made by an individual customer at that institution.

“Since the start of FDIC insurance on January 1, 1934, no depositor has lost a penny of insured funds as a result of a failure,” the body says.

What was FDIC’s complaint against Bank of America?

The recent Bank of America ruling comes more than eight years after the FDIC launched its lawsuit against the institution, alleging it had paid insufficient insurance premiums by underreporting its vulnerability to a specific risk factor.

FDIC said Bank of America had failed to properly report its exposure to business partners between 2011 and 2014.

This led the regulator to initially claim the bank was guilty of “at least $542 million” in unpaid premiums, before increasing this amount to more than $1.1 billion.

“Because Bank of America refuses to pay, the FDIC seeks relief from this Court,” the agency said in its January 2017 complaint against the North Carolina-based bank, which is the second largest in the U.S., per Federal Reserve statistics.

Bank of America escapes “time-barred” FDIC claims

On March 31 this year, U.S. District Judge Loren L. Alikhan ruled that Bank of America owed the FDIC for underpaid premiums from the period between the second quarter of 2013 and the fourth quarter of 2014.

However, Alikhan said Bank of America could not be ordered to pay the FDIC money the regulator claimed for earlier premiums, as these periods were now “time-barred”.

“We are pleased the judge has ruled and have reserves reflecting the decision,” Bank of America spokesperson Bill Haldin said in a statement issued to the Reuters news agency.