FDIC premiums
Federal Deposit Insurance Corporation v. Bank of America N.A.
Date: April 14, 2025
Issue: Whether Bank of America violated the Federal Deposit Insurance Act (FDIA) and the FDIC’s 2011 rule by underpaying its quarterly premiums from 2013 to 2014.
Case Summaries: A Washington D.C. federal court granted the FDIC partial summary judgment, ruling that Bank of America (BofA) must pay $540 million for allegedly underpaying its quarterly premiums from 2013 to 2014.
The FDIC issued its 2011 rule after the 2008 financial crisis and the Dodd-Frank Act to improve how it assessed deposit insurance. The rule replaced the FDIC’s risk category system with a scorecard-based method for large and highly complex institutions (HCIs), using performance and loss severity scores to better capture risk. For HCIs, counterparty exposures at the consolidated entity level must be reported.
After a 2016 audit, the FDIC alleged that from 2012 to 2014, BofA failed to consolidate counterparty exposures to the ultimate parent level. Instead, BofA reported only direct exposures, excluding those tied to subsidiaries or affiliates. This reporting allegedly lowered its assessments, and the FDIC invoiced BofA for over $1.12 billion in underpaid fees.
In 2017, the FDIC sued BofA for violating the FDIA by underpaying assessments and unjustly enriching itself. BofA argued that the FDIC’s 2011 rule violates the Administrative Procedure Act (APA) because it conflicts with the FDIA, is arbitrary and capricious, and suffers from procedural flaws. It also argued some assessment periods were time-barred, and the FDIC lacked grounds for an unjust enrichment claim.
A magistrate judge recommended sending the limitations defenses to a jury. But in July 2024, the Supreme Court’s Loper Bright decision overturned Chevron deference, barring courts from deferring to agency interpretations of ambiguous laws. Given the magnitude of that decision and its potential effect on this case, the court vacated the magistrate’s recommendation and denied both sides’ summary judgment motions. The parties then filed new motions.
Judge Loren Alikhan ruled that the FDIC did not violate the APA when issuing and enforcing the 2011 rule. Citing Loper Bright, the court emphasized its duty to independently determine whether the agency acted within its statutory authority. While courts must now interpret statutes without deferring to agencies, the court noted Congress may still allow agencies some discretion. The court determined the FDIC acted within the broad authority granted by the FDIA, engaged in reasoned decision-making, relied on substantial evidence, and followed proper procedures.
After upholding the 2011 rule, the court found BofA liable for failing to follow the FDIC’s interpretation. The dispute centered on two HCI scorecard metrics — “Top 20 Counterparty Exposure” and “Largest Counterparty Exposure” — which required reporting at the “consolidated entity level.” The FDIC interpreted these terms to mean aggregating exposures across a counterparty’s entire corporate family to the ultimate parent. It described the term as a regulatory “term of art” drawn from Federal Reserve programs. On the other hand, BofA treated it as an accounting term requiring consolidation only within its structure. The court sided with the FDIC, concluding the rule was unambiguous and supported consolidation at the ultimate parent level based on its text, context, history, and purpose.
However, the court found the FDIC’s claims for underpaid assessments from Q1 2012 to Q1 2013 time-barred. The FDIA requires the FDIC to sue for unpaid assessments within three years of the due date. The FDIC filed in January 2017. Both parties agreed the claims from Q2 2013 to Q4 2014 were timely. But the FDIC argued the limitations period restarted when BofA revised its Call Reports and received new invoices. The court rejected that argument and held the earlier claims untimely. As a result, BofA will pay approximately $540 million, not the $1.12 billion the FDIC initially sought.
Bottom Line In a statement following Judge Alikhan’s decision, BofA stated, “We are pleased the judge has ruled and have reserves reflecting the decision.”
Documents: Opinion
