Capital One has filed a lawsuit against the Federal Deposit Insurance Corporation (FDIC), claiming that the bank was overcharged by more than $149.2 million during a special valuation set to compensate for losses incurred in the deposit insurance fund. This valuation arose from the collapses of Silicon Valley Bank and Signature Bank earlier in 2023.
In a complaint lodged on September 10, the bank stated that the FDIC mistakenly inflated its valuation by incorrectly categorizing a $56.2 billion figure held between two capital subsidiaries as uninsured deposits, according to reports from Reuters.
According to Capital One, they have been in dialogue with the FDIC about this issue for two years but still find themselves facing evaluations based on “false calculations.”
In their complaint, Capital One asked the judge to state that they should not incur daily penalties for overcharged amounts or failures to pay, which feels a bit concerning, really.
The FDIC announced its intention to extract $15.8 billion in May 2023, implementing additional charges over two years to recuperate losses following the bailouts of Silicon Valley Bank and Signature Bank.
As stated by regulators, 113 banks will be subjected to this special valuation, expected to take place in early 2024, with those holding at least $50 billion in assets covering 95% of their expenses. However, banks with under $5 billion in assets will be exempt from this evaluation.
A Quarterly Bank Profile from the FDIC released on May 31, 2023, revealed that the bank’s situation was strained by the government’s Deposit Insurance Fund, which had assets of $116 billion—down from $128 billion the previous quarter. Alarmingly, the ratio of assets to insured deposits in U.S. banks dipped to 1.1%, falling below the legally mandated minimum of 1.3%.
Deposit insurance reforms were a focal point of a Senate hearing held recently, discussing the urgent need for updates to the system in light of the bank turmoil experienced in 2023, primarily triggered by the collapse of Silicon Valley Bank.
