(Adds details on dispute; parties' responses)
By Dan Freed
May 2 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
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
(Reporting by Dan Freed in New York; Editing by Dan Grebler)