Banking giant, Bank of America, faces a hefty fine of $540 million, as per a recent lawsuit filed by the Federal Deposit Insurance Corporation (FDIC), due to allegations of risk management issues.
Bank of America Ordered to Pay $540.3 Million in Deposit Insurance Dispute
A long-standing legal dispute between the Federal Deposit Insurance Corporation (FDIC) and Bank of America (BofA) has reached a new milestone, with the bank being ordered to pay $540.3 million in unpaid deposit insurance premiums.
The dispute, which spans several years, centres around the calculation of premiums and interest on what BofA claims it has already paid. The bank alleges a "startling" change by the FDIC regarding interest rates applied to premium calculations, implying inconsistency or arbitrariness on the FDIC’s part.
The core contention involves the correct way to compute prejudgment interest on unpaid deposit insurance premiums related to large financial institutions. BofA has made significant payments to the FDIC totaling over half a billion dollars, which the bank claims should resolve the premiums suit, but the FDIC disagrees, prolonging the legal conflict.
The dispute touches on the supervisory and regulatory framework managed by the FDIC regarding large financial institutions' deposit insurance premiums, which was revised as recently as mid-2025, affecting how premiums and related charges are assessed.
In a related development, BofA has been ordered to pay the FDIC $540.3 million, representing the bank’s underpaid assessments from Q2 2013 to Q4 2014, plus interest. The order was signed on March 31 and made public on Monday. However, the amount falls short of the FDIC's claim of $1.12 billion in unpaid assessments.
The bank's first-quarter non-interest expenses totaled $17.8 billion, a 6% quarter-over-quarter increase. Part of this increase is due to higher litigation costs, as BofA mentioned increased litigation costs related to a long-running matter during its first-quarter earnings conference call.
In a bid to demonstrate the bank's credit risk profile's strength to withstand more challenging economic conditions, BofA purchased an $8 billion portfolio of residential mortgage loans, with expectations of adding about $100 million in net interest income annually.
It is important to note that the FDIC was established by the 1933 Banking Act amidst the Great Depression as a government agency to insure bank deposits up to a set limit, thus stabilizing the banking system and preventing bank runs. Deposit insurance premiums are paid by banks to maintain this fund, overseen by the FDIC.
The judge in the case ruled that the law is not on BofA's side, and the lender is liable for the unpaid assessments. However, she indicated she sided with the bank on the point that it did not intend to evade. The exact details of the lawsuit filings and the FDIC's claims are within recent banking law reporting, but it is clear the dispute revolves around how the FDIC calculates premiums and interest on what BofA claims it has fully paid.
As of mid-2025, no public record suggests a resolution has been reached yet, indicating this remains an active and technically complex legal conflict.
The legal conflict between the Federal Deposit Insurance Corporation (FDIC) and Bank of America (BofA) is deeply rooted in the calculation of premiums and interest on deposit insurance for large financial institutions, which is a crucial aspect of the banking-and-insurance industry. This dispute, with BofA being ordered to pay $540.3 million in underpaid assessments, also involves the finance business, as a significant portion of BofA's first-quarter non-interest expenses is attributed to increased litigation costs related to this ongoing matter.
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