Bank of America is being accused of stiffing the FDIC, the government agency that insures people’s deposits against a bank failure.
The FDIC filed a lawsuit in federal court on Monday demanding that Bank of America pay $542 million it owes to the regulator’s deposit insurance fund.
“Because Bank of America refuses to pay, the FDIC seeks relief from this Court,” the suit in federal court in Washington said.
The reason: Bank of America () underreported a key risk metric by tens of billions of dollars during the final three quarters of 2013 and all of 2014, the lawsuit said. The FDIC said that allowed BofA to appear less risky than it really was — and avoid paying the FDIC an average of $77 million each quarter into the agency’s deposit insurance fund.
The FDIC insures customers’ deposits up to $250,000 in case a bank collapses. That’s why even though hundreds of banks went belly up during the 2008 crisis, Americans didn’t lose money that was kept in FDIC-insured accounts.
Banks of all sizes must pay into the insurance fund, which currently has nearly $81 billion.
The FDIC said this is the first time it has filed suit against a bank to recover insurance fees in more than two decades.
A person familiar with the FDIC’s thinking said the lawsuit was triggered by a statute of limitations issue, not a change in administration.
Full article: FDIC: Bank of America owes us half a billion dollars (CNN Money)