Federal Deposit Insurance Corporation v. Bank of America, N.A.
Civil Action No. 2017-0036
D.D.C.Apr 14, 2025Background
- FDIC promulgated a 2011 Rule (scorecards for large banks and HCIs) requiring certain counterparty-exposure reporting "at the consolidated entity level" and used those measures in assessment calculations under the FDIA.
- The Rule defined counterparty exposure as EAD for derivatives and SFTs plus gross lending exposure (including unfunded commitments) "for each counterparty or borrower at the consolidated entity level."
- A 2016 FDIC audit found Bank of America, N.A. (BANA) did not consolidate counterparties to the counterparties' ultimate parent level for 1Q2012–4Q2014, reducing its assessment payments; FDIC invoiced $1.12B and sued in 2017.
- The parties litigated the Rule’s validity under the APA, the proper interpretation of "consolidated entity level," statute-of-limitations issues, and whether FDIC may obtain disgorgement/unjust-enrichment relief.
- The court held the 2011 Rule valid under the FDIA and APA, construed "consolidated entity level" to require ultimate-parent consolidation of counterparties, rejected BANA’s fair-notice and equitable-defense arguments, and limited recovery by statute of limitations to 2Q2013–4Q2014.
- Judgment entered for FDIC in the amount of $540,261,499.90 (underpaid assessments for 2Q2013–4Q2014), plus pre- and post-judgment interest.
Issues
| Issue | FDIC (Plaintiff) Argument | BANA (Defendant) Argument | Held |
|---|---|---|---|
| Validity of 2011 Rule under FDIA/APA | Rule is within FDIC’s broad statutory discretion and was promulgated with reasoned analysis and adequate notice. | Scorecards (esp. performance score) exceed statutory limits, lack evidentiary basis, and are arbitrary and capricious. | Rule is lawful: FDIC acted within FDIA authority and engaged in reasoned decisionmaking supported by validation and notice. |
| Meaning of “consolidated entity level” in counterparty-exposure definition | Plain and technical meaning requires consolidation to counterparties’ ultimate parent (aggregate across corporate family). | Term is ambiguous and should mean only consolidation of the bank’s own affiliates (i.e., cancel intra-entity items on reporting bank’s side). | Unambiguous: requires counterparty-side consolidation to ultimate parent level; FDIC interpretation stands. |
| Fair-notice / due-process defense | Regulations and subsequent Call Report instructions and notices provided adequate notice. | Industry confusion and later 2014 clarifying language show lack of fair notice, so retroactive liability is unfair. | Fair notice satisfied: text + Call Report instructions/december 2011 notice/march 2012 guidance give ascertainable standard; BANA failed to seek clarification. |
| Statute of limitations for earlier quarters (1Q2012–1Q2013) | Tolling/restart: revised invoices after amended Call Reports and/or discovery exception (fraudulent concealment) make those claims timely. | Claims are time-barred; FDIC had inquiry notice by May 2012. | Claims for 1Q2012–1Q2013 are time-barred; only 2Q2013–4Q2014 recoverable. |
| Equitable relief (disgorgement/unjust enrichment) | FDIC may seek disgorgement of BANA’s ill-gotten gains in addition to statutory recovery. | FDIC’s statutory remedy (recoup assessments + interest) is adequate; disgorgement unnecessary and extraordinary. | Disgorgement denied: equitable relief unavailable because FDIC has adequate statutory remedy; Section 1817(h) savings clause does not overcome ordinary equitable prerequisites. |
Key Cases Cited
- Loper Bright Enterps. v. Raimondo, 603 U.S. 369 (2024) (courts must exercise independent judgment post-Chevron when reviewing agency statutory interpretation)
- Chevron U.S.A. Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) (agency-deference framework discussed; later addressed by Loper Bright)
- Doolin Sec. Sav. Bank, F.S.B. v. Fed. Deposit Ins. Corp., 53 F.3d 1395 (4th Cir. 1995) (FDIA affords FDIC considerable discretion in choosing risk factors)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 463 U.S. 29 (1983) (arbitrary-and-capricious review requires rational connection between facts and agency choice)
- Kisor v. Wilkie, 588 U.S. _ (2019) (framework for deference to agency interpretations of ambiguous regulations)
- Norwest Bank Minn. N.A. v. Fed. Deposit Ins. Corp., 312 F.3d 447 (D.C. Cir. 2002) (limitations-period accrual turns on when right accrued; later assessments do not restart clock)
- Gabelli v. Sec. & Exch. Comm’n, 568 U.S. 442 (2013) (limitations principles limiting revival by later acts)
- Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51 (1984) (limitations on estoppel against the government)
- Burlington Truck Lines v. United States, 371 U.S. 156 (1962) (courts require rational connection between findings and agency action)