A third-party report commissioned by Federal Reserve Vice Chair Michelle Bowman found that regulators knew of Silicon Valley Bank's vulnerabilities a year before its March 2023 collapse but failed to act due to risk-averse culture and fear of making imperfect decisions. The bank's massive losses on bond holdings, triggered by aggressive Fed rate increases, sparked a depositor run that forced its seizure.
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.