According to Reuters, the Federal Deposit Insurance Corporation filed a lawsuit accusing Capital One of paying nearly $100 million less than it should have to help bail out depositors of Silicon Valley Bank and Signature Bank, which both collapsed in 2023. The lawsuit was filed Monday night in federal court in Alexandria, Virginia, just two months after Capital One sued the FDIC claiming it was being overcharged by $149.2 million. At the heart of the dispute is whether Capital One underreported its uninsured deposits by excluding a $56 billion position between two subsidiaries from regulatory reports. The FDIC says this exclusion led Capital One to calculate a $324.84 million special assessment instead of the correct $474.08 million amount, leaving about $99.4 million unpaid. Capital One had no immediate comment on Tuesday, while the FDIC did not immediately respond to requests for comment.
Banking Battle Royale
So here we have a classic regulatory standoff. The FDIC’s position is pretty straightforward: “There are no time machines when it comes to special assessments.” Basically, they’re saying Capital One can’t retroactively decide what counts as deposits after the fact. The bank apparently excluded that $56 billion position between subsidiaries from its regulatory reports, which directly affects how much it owes for the special assessment program.
And here’s the thing – this isn’t just about one bank. The FDIC estimated last June it would recover $18.6 billion from 111 banks through these special assessments. That’s real money, and when one major player like Capital One pays less, someone else might have to pay more. It creates ripple effects throughout the entire banking system.
What’s At Stake
Look, this legal fight matters beyond just the two parties involved. When banks fail like SVB and Signature did, the entire industry foots the bill through these assessments. The FDIC’s deposit insurance fund took a massive hit, and they’re trying to make everyone whole. Capital One estimated back in July it might need to set aside an additional $200 million for this matter, which suggests they knew this fight was coming.
What’s interesting is the timing. The FDIC already sued 17 former Silicon Valley Bank executives and directors in January, seeking billions for alleged gross negligence. Now they’re going after the banks that are supposed to help cover the cleanup costs. It feels like they’re fighting on multiple fronts to recover every dollar they can.
Broader Implications
This case could set important precedents for how banks report inter-subsidiary transactions and what counts as deposits for regulatory purposes. If Capital One wins, other banks might try similar accounting maneuvers. If the FDIC prevails, we could see tighter reporting requirements across the board.
And let’s not forget – this is happening while the banking sector is still recovering from the 2023 regional banking crisis. Regulators are clearly in no mood to play nice when it comes to protecting the deposit insurance system. They’re watching every move, and they’re not afraid to sue when they think someone’s trying to skirt their obligations.
