The Federal Deposit Insurance Corporation (FDIC) has taken legal action against Capital One, asserting that the bank owes nearly $100 million more to address depositor losses linked to the collapse of Silicon Valley Bank and Signature Bank in 2023.
This lawsuit was filed in federal court in Alexandria, Virginia. It follows Capital One’s earlier lawsuit where the bank claimed the FDIC was trying to charge it $149.2 million too much. The crux of the matter lies in Capital One allegedly underreporting its uninsured deposits. Specifically, the bank excluded a $56 billion figure from its reports, which could mislead regulators about its financial health.
The FDIC relies on deposit data to assess charges that help replenish its deposit insurance fund after bank failures. According to the FDIC, Capital One’s exclusion led to a lower special assessment of $324.84 million, instead of the correct figure of $474.08 million. The FDIC claims that approximately $99.4 million remains unpaid.
In a statement, the FDIC emphasized that there are no “time machines” when it comes to assessments. They noted that the funds excluded should still be considered deposits, for which the subsidiary already benefited from FDIC insurance.
Capital One anticipates it might need to set aside an additional $200 million to resolve this issue.
In March 2023, the FDIC took control of Silicon Valley Bank and Signature Bank. Back in June, they estimated that they would recuperate around $18.6 billion from 111 banks through special assessments. Notably, banks with assets less than $5 billion are exempt from these charges, while the FDIC currently insures about 4,376 banks and savings associations.
Earlier this year, the FDIC also sued 17 former executives from Silicon Valley Bank, seeking billions for alleged negligence and breaches of duty. This case remains open, highlighting the ongoing scrutiny in the banking sector following recent collapses.
As these legal battles unfold, experts warn of the ripple effects on consumer trust and bank stability. According to a recent survey by the American Bankers Association, nearly 70% of consumers express concern about the safety of their deposits post-bank failures.
In today’s financial landscape, it’s vital for banks to maintain transparency. Users are increasingly attentive to financial matters, and social media trends reflect this shift. Many are sharing their experiences and concerns online regarding banking stability and the adequacy of protections like the FDIC insurance.
For more insights into the impact of these financial issues, you can read the FDIC’s official report on deposit insurance.
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Signature Bank, Silicon Valley Bank, Capital One, Federal Deposit Insurance, special assessments
