A federal judge in Washington handed Bank of America N.A. a loss yesterday in its fight with the Federal Deposit Insurance Corporation over $1.75 billion from the collapse of failed financial institutions. The ruling wasn't a total defeat for Bank of America, though. The company filed a suit against the agency in July that addressed issues raised in yesterday's decision.
Following the 2009 collapse of financial institutions in a multi-billion dollar fraud scheme, the FDIC was appointed as receiver. Bank of America sued the agency in 2010 to recover losses for investors, saying its claims were wrongfully denied. The agency filed counterclaims seeking $900 million from the bank for allegedly breaching its duties as the custodian and bailee of one of the failed institutions, Colonial Bank.
In April, the agency issued a "no value" determination, saying there were no longer any assets in the Colonial receivership estate for Bank of America to recover. Without money in controversy, U.S. District Judge Barbara Rothstein, a visiting judge from the U.S. District Court for the Western District of Washington, wrote yesterday that she lacked subject matter jurisdiction to hear Bank of America's claims.