FDIC sues Bank of America over payment dispute

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By Patrick Rucker

<span class="articleLocation”>A banking regulator on Monday sued Bank of
America Corp over $542 million in deposit insurance that
it said the second-largest U.S. bank “refuses to pay.”

The Federal Deposit Insurance Corporation (FDIC) charges
banks a fee to protect customer deposits. The largest financial
companies must pay more for that protection.

“Bank of America underreported its counterparty exposures by
tens of billions of dollars,” the complaint filed in federal court in Washington said.

Specifically, the FDIC points to “counterparty risk” or the
danger that another leading financial firm could fail and cost
Bank of America. No other leading lender has understated its
counterparty risk as did Bank of America, the complaint said.

Lawyers for the bank said they expected to prevail in court.

Michael Krimminger, a lawyer for Cleary Gottlieb who is
representing the Charlotte-based bank, said the dispute
concerned the interpretation of technical rules governing the
insurance fund.

“In my view, the FDIC’s position in this instance is
erroneous,” he said.

The FDIC declined to comment. (Additional reporting by Dan Freed in New York)



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