FDIC Defeats SVB Parent Trust’s $1.71 Billion Claim

Silicon Valley Bank failed on March 10, 2023, with about $209 billion in assets, becoming one of the largest bank collapses in U.S. history. Rapid interest-rate increases exposed at least $4.52 billion of losses in its portfolio of long-dated government and mortgage-backed securities, helping trigger a run by depositors, many of whose balances were uninsured. The failure disrupted technology startups and became a defining case of how concentrated funding and poorly managed duration risk can destabilize a bank.

On Aug. 31, 2026, U.S. District Judge Beth Labson Freeman in San Jose ruled after a 12-day bench trial that SVB Financial Trust could not pursue a $1.71 billion claim against the Federal Deposit Insurance Corporation. Freeman found that former executives, encouraged by the board, were negligent in taking excessive interest-rate and liquidity risks. She rejected arguments that the business judgment rule shielded the directors or that the FDIC caused the losses by selling securities, placing responsibility on the holding company’s successor.