The ruling, issued May 12, 2026, clears the way for trial on the single remaining contract claim. Under the parties’ stipulation, the FDIC’s liability is set at $1.7 billion, reduced by any amounts the regulator proves were caused by the Trust’s affirmative defenses.
The litigation was streamlined in May 2025 when the parties stipulated to dismiss all claims except the contract count. The FDIC has raised four affirmative defenses, arguing the Holding Company’s mismanagement of investment decisions and a $294 million dividend caused the losses.
The Trust sought to exclude evidence of the March 2023 bank run and closure, arguing it was irrelevant and prejudicial. The court rejected the motion, finding the evidence relevant to the FDIC’s defense that mismanagement of interest-rate and liquidity risk made the bank susceptible to the run.
The court also denied the Trust’s motion to bar FDIC experts from testifying about alternative investment strategies. Judge Freeman noted that while the experts did not offer an "optimal" strategy, they were permitted to opine on disclosed alternatives that would have reduced risk.
In a conditional ruling, the court ordered the FDIC to produce intermediate calculations and data underlying the testimony of its compensation expert, Robert Jackson, after the Trust alleged his report overstated executive compensation by at least $20 million.
The FDIC’s attempts to exclude the Trust’s expert, Columbia University economics professor Glenn Hubbard, were also denied. The court found Hubbard qualified to testify on the standard of care for directors, rejecting the FDIC’s argument that he lacked banking experience.
The court further denied the FDIC’s motion to preclude the Trust from arguing that the bank run or interest rate changes were superseding causes of the FDIC’s losses, leaving the causation dispute for the jury.
The Trust was substituted as plaintiff in February 2025 pursuant to an order from the U.S. Bankruptcy Court for the Southern District of New York.