How to deal with your boss when he is totally wrong?

At first totally agree with him/her.

Make him/her feel that you really like his/her ideas.

When he/she starts to rely on you then express the problem of his/her ideas as if you just explored them and it was something that both of you ignored unintentionally and your boss would never take such decision if he/she have had noticed those issues.

Try to convince him/her why you both were (not only your boss) wrong. Explain the legal/logical aspects to him/her. If he/she understands then well & good. But if he/she doesn't understand, probably he/she doesn't want to understand. Then you have to find a way out to reach his/her boss to explain your issue.

Well,this depends on few things such(his character,the way the company or the bank goes....)but Usually it takes3 steps:First,tell him in a decent way the situation and the other options do we have here to deal with it.If he responds then it's done,if not we go to second step.Second,i send him an official e-mail that explains the situation and our options.If he responds ,it's fine,if not then he have to send me official e-mail to get myself clean and not in a stress,if he refused that then we have to take this to the next level.Third,i tell him that i am going to take this higher and send the e-mail to his boss and tell him the whole thing.Note:if this all about the final result of something whatever how to do it.Then i can smile in his face and get the job done right and successful not using his way and we get to the final result he wanted.