Judge Blocks SVB Financial Trust $1.71 Billion FDIC Claim

U.S. District Judge Beth Labson Freeman ruled that SVB Financial Trust, the successor to the parent company of Silicon Valley Bank, cannot pursue a $1.71 billion claim against the Federal Deposit Insurance Corporation. The decision follows a 12-day trial concerning the bank's March 2023 collapse, which was precipitated by $4.52 billion in losses from mortgage-backed securities and long-term government bonds during a period of rising interest rates.

Judge Freeman determined that the bank's board of directors and executives acted negligently by accepting excessive interest rate and liquidity risks. The court rejected arguments that the FDIC caused the losses by selling securities at a loss, concluding that the holding company established the policies and metrics that led to the failure and must now "live with the consequences."

In a separate legal action, the FDIC is pursuing lawsuits against 17 former directors and executives, including former CEO Gregory Becker, to recover billions of dollars based on allegations of gross negligence.