April 14 (Reuters) – A federal judge ordered Bank of America (BAC.N)
, opens new tab to pay $540.3 million in a long-running Federal Deposit Insurance Corporation lawsuit accusing the second-largest U.S. bank of underpaying what it owed for deposit insurance.
In a decision made public on Monday, U.S. District Judge Loren AliKhan in Washington, D.C., said the payment covers assessments from the second quarter of 2013 through the end of 2014, plus interest.
Sign up here.
The FDIC sued Charlotte, North Carolina-based Bank of America for $1.12 billion in 2017, accusing it of reducing its deposit insurance contributions by failing to honor a 2011 rule that changed how banks report risk exposure to counterparties.
That rule was one of many federal reforms designed to ensure the stability of the banking system, and avert a repeat of the 2008 global financial crisis.
In a 59-page decision, AliKhan rejected Bank of America’s claims that there was no reasonable basis for the rule, and that the FDIC acted arbitrarily and capriciously.
AliKhan said the FDIC was not required to develop a “perfect measure” of predicting banks’ potential exposure to losses, and Bank of America could claim it “lacked fair notice of what was required of it.”
She also said the FDIC waited too long to sue over claims predating the second quarter of 2013.
Bank of America strongly denied any intent to evade payments.
Bill Halldin, a Bank of America spokesperson, said in a statement: “We are pleased the judge has ruled and have reserves reflecting the decision.”
The FDIC declined to comment.
AliKhan issued her decision on March 31, and released it in partially-redacted form.
Bank of America is expected to report first-quarter results on Tuesday.
The case is FDIC v Bank of America NA, U.S. District Court, District of Columbia, No. 17-00036.
Reporting by Jonathan Stempel in New York; Additional reporting by Pete Schroeder in Washington, D.C.; Editing by Leslie Adler and Aurora Ellis
Our Standards: The Thomson Reuters Trust Principles.
