An independent review faulted Federal Reserve staff for failing to act on known vulnerabilities at Silicon Valley Bank before its 2023 collapse, the second-largest banking failure in U.S. history. Fed banking regulator Michelle Bowman attributed the supervisory inaction to a culture of risk aversion and unclear decision-making processes, despite staff knowing about mounting problems as early as March 2022. The report dismissed social media as a factor in accelerating the bank run.
An outside review commissioned by the Federal Reserve found that Fed staff knew or should have known Silicon Valley Bank was vulnerable before its March 2023 failure, according to Vice Chair Michelle Bowman. The report, conducted by consulting firm Starling Advisory Group, contradicts an earlier internal review by Fed Governor Michael Barr that blamed regulatory standard changes, instead attributing supervisory failures to staff awareness of risks.
An outside review commissioned by the Federal Reserve found that Fed staff knew or should have known Silicon Valley Bank was vulnerable before its March 2023 collapse, according to Vice Chair Michelle Bowman. The bank experienced a run after disclosing $1.8 billion in securities losses, with 94% of deposits uninsured and concentrated in venture capital–backed tech companies. The findings raise questions about the Fed's prior oversight and may prompt scrutiny of former Supervision Vice Chair Michael Barr's role.