(Adds details on dispute; parties’ responses)
By Dan Freed
May 2 (Reuters) - A U.S. banking regulator has more than doubled its claim against Bank of America Corp in a dispute over deposit insurance and interest, according to a securities filing on Tuesday.
The U.S. Federal Deposit Insurance Corp said Bank of America owes it more than $1.1 billion, arguing that the second-largest U.S. bank was underestimating the potential cost of a failure among its trading partners.
The FDIC’s new claim, filed on April 10 in the U.S. District Court for the District of Columbia, follows an original demand for $542 million made in January. At that time, the FDIC contended that Bank of America’s underpayments exceeded $1 billion, and reserved the right to amend its complaint.
Bank of America, which is contesting the notion that it must pay additional sums, believes it is compliant with FDIC rules, spokesman Lawrence Grayson said in a statement.
In its claims, the FDIC said Bank of America previously understated its “counterparty risk,” or the danger that trading partners could fail, thus rendering them unable to repay obligations and threatening Bank of America’s own financial health.
An FDIC spokeswoman declined to comment.
The regulator charges banks a fee to protect customer deposits. The biggest U.S. lenders must pay more for that protection. (Reporting by Dan Freed in New York; Editing by Dan Grebler)