Bank of America faces a $540 million bill after a federal judge ordered the financial institution to pay up on Monday amid a federal lawsuit.
The ruling comes after the Federal Deposit Insurance Corporation lawsuit accused the mega U.S. bank of failing to pay the complete amount it owed for deposit insurance. According to a press release, U.S. District Judge Loren AliKhan’s 59-page decision resolves a long-running lawsuit filed by the Federal Deposit Insurance Corporation in 2017, which claimed Bank of America violated a 2011 regulation after it reduced its deposit insurance contributions.
The FDIC sought $1.12 billion after Bank of America allegedly failed to uphold the rule, which was reportedly established to modify how banks report risk exposure to counterparties, alongside other federal reforms created to protect the banking system and avoid financial crises. The Washington D.C. judge rejected Bank of America’s claims that the basis for the rule was unreasonable. The financial institution’s argument that the Federal Deposit Insurance Corporation acted “arbitrarily and capriciously” was also rejected by Judge AliKhan in Monday’s ruling.
The decision stated that the Federal Deposit Insurance Corporation did not need to present a precise measure of banks’ probable exposure to losses. However, Bank of America could claim that its company “lacked fair notice of what was required of it.”
“We are pleased the judge has ruled and have reserves reflecting the decision,” said Bank of America spokesperson Bill Haldin.
Judge AliKhan ruled this week that Bank of America would pay $540 million to cover assessments from the second quarter of 2013 through 2014. The total will also handle interest. For claims earlier than the second quarter of 2013, the judge said it was too late for the FDIC to sue. Bank of America was expected to report first-quarter results on Tuesday.
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