Bank of America Must Face $1.12 Billion Deposit-Insurance Suit

(CN) – A federal judge declined to dismiss an FDIC lawsuit seeking $1.12 billion from Bank of America for allegedly underpaying what it owed for deposit insurance.

In January 2017, the Federal Deposit Insurance Corporation sued Bank of America for $542 million in deposit insurance payments that the bank allegedly refused to pay.

The FDIC asserted that the bank reported incorrect financial information from 2011-2016, underreporting its counterparty exposure in order to reduce the amount it owed for deposit insurance.

A couple months later, the FDIC amended its complaint to add a $583 million claim for unjust enrichment, bringing its total demand on the bank to $1.12 billion.

But U.S. District Judge Emmet Sullivan denied Bank of America’s motion to dismiss the FDIC’s lawsuit, finding the parties must engage in discovery to determine if the bank intended to deceive the agency.

“The court finds that the FDIC has alleged facts sufficient to allow the reasonable inference that BANA [Bank of America] acted with intent to evade assessments,” Sullivan said. “Specifically, the FDIC alleges that BANA should have known how to properly report its data because the same compliance group was responsible for reporting both BANA’s and its parent corporation’s quarterly data.”

The parties also dispute whether the FDIC’s claim are timely, but the judge found it unclear on the current record when the FDIC should have been aware of the bank’s underpayments.

“The court cannot dismiss the relevant alleged underpayments as time-barred because it is plausible that BANA made a false statement with the intent to evade assessment payments, tolling the statute of limitations,” the 22-page opinion states.

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