Capital One Sues FDIC, Alleging Overcharge in Banking Crisis-Related Special Assessment

Capital One reportedly sued the Federal Deposit Insurance Corp., alleging that the regulator overcharged the bank by $149.2 million during a special assessment meant to make up for the deposit insurance fund’s losses resulting from the collapses of Silicon Valley Bank and Signature Bank in 2023.

The bank alleged in a complaint filed Wednesday (Sept. 10) that the FDIC inflated the assessment by incorrectly counting $56.2 billion of positions between two Capital One subsidiaries as uninsured deposits, Reuters reported Thursday (Sept. 11).

Capital One said in the complaint that it has communicated with the FDIC about this issue for two years but that the regulator continues to seek the special assessment “based on its erroneous calculation,” according to the report.

In its complaint, the bank asked a judge to declare that it does not owe the amount it was overcharged or daily penalties for nonpayment, per the report.

The FDIC announced in May 2023 that it planned to extract $15.8 billion in extra fees over two years to recoup its losses after the rescues of Silicon Valley Bank and Signature Bank.

The regulator said 113 banks would pay this special assessment, starting in early 2024, with those that have at least $50 billion in assets covering 95% of the cost. Banks with less than $5 billion in assets were exempt from the assessment.

On May 31, 2023, the FDIC released a quarterly banking profile showing that the banking crisis had strained the government’s deposit insurance fund.

At the time, the fund had $116 billion in assets, down from $128 billion in the previous quarter. The ratio of assets to insured deposits in America’s banks had dropped to 1.1%, which was below the legally mandated minimum of 1.3%.

Deposit insurance reform was the topic of a Senate hearing held Wednesday.

Titled “Evaluating Perspectives on Deposit Insurance Reform,” the hearing highlighted the banking turmoil of 2023, which shone a spotlight on the shortcomings of the current system and featured recommendations for modernization.

At the hearing, bank CEOs told lawmakers that the deposit insurance reform is urgently needed in the wake of the 2023 collapse of Silicon Valley Bank.