Bank of America Ordered to Pay $540.3 Million in FDIC Lawsuit Over Underpaid Deposit Insurance Premiums

Court Rules Decade-Old Risk Reporting Lapse Resulted in Shortfall to Federal Insurance Fund

In a landmark decision years in the making today, a U.S. federal judge has ordered Bank of America to pay $540.3 million to the Federal Deposit Insurance Corporation , concluding a high-stakes legal dispute over how the bank calculated its deposit insurance premiums in the aftermath of the global financial crisis.

The ruling, issued by Judge Loren AliKhan and made public on Monday, April 14, 2025, found that Bank of America had underpaid assessments to the federal insurance fund by misreporting its counterparty exposures from 2011 through 2016, a violation that understated the bank’s perceived risk and led to lower premiums.

The judgment delivers the FDIC a significant — though partial — victory in a lawsuit it first filed in 2017, and underscores the intense scrutiny regulators continue to place on complex risk modeling practices by systemically important financial institutions.

The Dispute at the Core: A Question of Exposure and Interpretation

At the heart of the case was a technical yet consequential disagreement over how counterparty exposures should be reported for insurance assessment purposes. The FDIC argued that Bank of America failed to report exposures on a consolidated basis, as required for “highly complex institutions” under 12 CFR Part 327, the regulation governing deposit insurance premiums.

By segmenting rather than consolidating exposures, the FDIC claimed, Bank of America effectively lowered its perceived risk profile — and thus reduced its quarterly payments to the Deposit Insurance Fund .

In its initial filing in 2017, the FDIC sought $542 million in unpaid assessments and interest, focusing on just a subset of quarters. That claim was later amended, with the government eventually alleging underpayments could exceed $1.1 billion.

Judge AliKhan’s ruling affirms the liability but stops short of the agency’s most aggressive claims, instead determining that $540.3 million in assessments were lawfully due.

“The court found the FDIC’s regulatory interpretation to be controlling and Bank of America’s methodology inconsistent with the reporting requirements,” said one financial regulation expert familiar with the decision.

A Timeline of Legal Complexity

The case unfolded over more than eight years, with critical junctures that shaped the final outcome:

2017: The FDIC filed suit, seeking $542 million based on underpayments from Q2 2013 through Q4 2014.
2018: Bank of America attempted to dismiss the suit, arguing the FDIC’s rules were ambiguous. The court rejected the motion.
Post-2018: The FDIC expanded its claims to include more quarters and additional underpayments, eventually seeking more than $1.1 billion.
April 14, 2025: The court publicly released its final judgment ordering Bank of America to pay $540.3 million.

While the amount ordered is far less than what the FDIC ultimately pursued, the ruling still sends a strong signal: compliance failures tied to technical interpretations of risk reporting can carry material financial consequences, even more than a decade later.

Bank of America's Defense and the Court’s Rejection

Bank of America had long argued that the FDIC’s reporting guidance was unclear, and that its interpretation of the exposure calculations was made in good faith. The bank maintained that the FDIC had failed to follow proper procedures under the **Administrative Procedure Act ** when implementing the disputed rules.

Judge AliKhan rejected those arguments, instead siding with the FDIC’s view that the bank’s reporting failed to meet existing standards. The court’s use of the term “lawfully payable” in its judgment indicates that the decision is framed as a correction of owed assessments — not a punitive action.

This distinction is key. While the judgment may not carry the stigma of a fraud finding or punitive damages, it confirms the FDIC’s regulatory authority and the binding nature of its assessment framework.

Financial Impact: Manageable Yet Material

Bank of America reported 2024 net income between $25.5 billion and $27.1 billion and annual revenue above $100 billion. The $540.3 million judgment represents:

~2% of 2024 net income
~8% of a single quarter’s net income
A fraction of total assets exceeding $3 trillion

While the fine is financially manageable, it will likely be deemed material for accounting and investor disclosure purposes, particularly given its origin in a regulatory compliance lapse.

“Investors aren’t worried about the payment itself,” said one institutional analyst. “They’re watching how the bank communicates its response and whether any broader weaknesses are revealed.”

Peer Banks Quietly Reassess Risk Reporting Frameworks

The implications of the ruling stretch well beyond Bank of America. Large banks designated as “highly complex institutions” under FDIC rules are likely re-examining their own exposure reporting systems to ensure compliance with consolidated risk requirements.

Internal audit teams at multiple peer banks have reportedly been asked to stress-test counterparty exposure calculations, especially those relying on internal risk models aligned with Basel III standards.

“There’s no regulator like the one who just won a case,” said a former compliance officer. “Everyone's on notice now — not just about the rules, but about how the courts will interpret them.”

Market Response: Subdued but Watchful

As of April 14, Bank of America stock was down ~19% year-to-date, amid broader volatility in the financial sector. The court’s decision, while significant, was below market expectations in terms of financial impact, and as such may produce only a muted trading response.

The judgment also arrived just ahead of Bank of America’s Q1 2025 earnings, due on April 15, setting up a high-stakes moment for investor relations. Analysts will watch closely for any mention of appeals, internal changes, or forward-looking compliance measures.

Appeal Uncertain as Bank Weighs Strategic Options

It remains unclear whether Bank of America will appeal the judgment. Legal analysts say potential grounds could include:

The court’s interpretation of FDIC regulations
The clarity (or lack thereof) of guidance during 2011–2016
Potential APA-related arguments regarding rule promulgation

However, such a move risks extending the issue further into the public eye and may be weighed against the benefits of simply paying and closing the matter.

A Quiet But Sharp Reminder for the Banking Sector

The $540.3 million judgment may not dominate headlines like multibillion-dollar crisis-era settlements, but its long-term impact could be more subtle — and far-reaching.

It confirms the FDIC’s resolve to enforce its complex risk-based premium system, even when violations are buried in the technical architecture of internal reporting models. For large financial institutions, it is a reminder that precision is not optional when it comes to regulatory calculations — and that compliance infrastructure must evolve in lockstep with regulation.

Whether Bank of America appeals or accepts the judgment, the broader message has already landed: in the post-crisis era, regulatory risk is not just a compliance issue — it's a balance sheet one.

Bank of America Ordered to Pay $540.3 Million in FDIC Lawsuit Over Underpaid Deposit Insurance Premiums