FDIC Sues Capital One Over Silicon Valley, Signature Bank Failures
The Federal Deposit Insurance Corporation (FDIC) has taken legal action against Capital One, alleging that the bank underpaid nearly $100 million in its obligation to support depositors affected by the failures of Silicon Valley Bank and Signature Bank in 2023. The lawsuit was filed on Monday in a federal court located in Alexandria, Virginia.
Details of the Lawsuit
This development follows Capital One’s own lawsuit two months prior, where it claimed that the FDIC sought to overcharge the bank by $149.2 million. The crucial point of contention centers on whether Capital One properly reported its uninsured deposits. The bank allegedly excluded a significant $56 billion position from its regulatory filings, which involved two of its subsidiaries.
Regulatory Compliance and Financial Assessments
The FDIC utilizes deposit information to compute special assessments aimed at recovering losses in its deposit insurance fund whenever banks face failure. According to the FDIC, the omission of the $56 billion in deposits resulted in Capital One calculating a special assessment of $324.84 million rather than the accurate amount of $474.08 million. Consequently, a balance of approximately $99.4 million remains unpaid.
- Capital One’s estimated additional funds required: $200 million
- Date of bank failures: March 2023
- Number of banks with less than $5 billion not charged: 4,376
Context of the Bank Failures
The FDIC took control of Silicon Valley Bank and Signature Bank in March 2023. In June, the agency projected it would recover $18.6 billion from 111 banks through these special assessments. These financial maneuvers are part of the FDIC’s ongoing efforts to manage public confidence in the banking system.
Additional Legal Proceedings
Earlier in January 2023, the FDIC also filed a lawsuit against 17 former executives and directors of Silicon Valley Bank in a federal court in San Jose, California. This lawsuit seeks billions of dollars for what the FDIC describes as gross negligence and breaches of fiduciary duties, with the case still ongoing.
As of now, Capital One has not issued any immediate statement regarding the lawsuit, nor has the FDIC responded to inquiries for comment.
