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Federal Reserve Review Finds Supervisors Missed Warning Signs Before SVB Collapse
Federal Reserve supervisory staff knew or should have known about serious vulnerabilities at Silicon Valley Bank as early as March 2022 but failed to take prompt action before the bank collapsed in 2023, according to preliminary findings from an independent review released Friday.
Federal Reserve Vice Chair for Supervision Michelle Bowman outlined the findings from the review conducted by Starling Advisory Group. The Fed has not released the full report.
The review found that SVB’s collapse resulted from a combination of vulnerabilities, including losses on its securities portfolio, a deposit base heavily concentrated in uninsured deposits and a lack of operational readiness to borrow from the Federal Reserve’s discount window.
According to Bowman, supervisors identified or should have identified those vulnerabilities by March 2022 but did not take “prompt and decisive action” to require the bank to address them.
The review attributed the delays in part to what Bowman described as a longstanding “culture of risk aversion.” She said some staff members believed it was safer to avoid taking action unless they were certain the decision was correct. A lack of clarity over who had authority to make supervisory decisions also contributed, according to the findings.
The report also examined whether social media accelerated the bank run that ultimately brought down SVB. Bowman said consulting firm Charles River Associates found that social media did not trigger the run and found no evidence that it accelerated the run. The analysis found that most social media discussion about the bank run occurred after the bank’s failure was already considered inevitable.
The findings differ from some conclusions in an earlier Federal Reserve review conducted under former Vice Chair for Supervision Michael Barr. Bowman said the new review found that the supervisory delays were not caused by the 2018 banking regulatory changes or by any directive from former Vice Chair for Supervision Randal Quarles. Quarles had left that position in October 2021, before the vulnerabilities identified in the review became most apparent.
The report has also become part of a broader political dispute over bank regulation. Sen. Elizabeth Warren, the top Democrat on the Senate Banking Committee, previously called for an independent investigation into the decision to hire Starling, citing the firm’s connections to Quarles.
Warren said Friday that the review appeared to “rewrite history,” while Bowman said the purpose of the review was to learn from the failure and improve Federal Reserve supervision.
Bowman said the Fed has already begun changes, including requiring monthly reports that allow examiners to escalate concerns directly to senior supervisors.
The Federal Reserve said the independent review is part of an effort to identify weaknesses in its supervisory process and prevent similar failures in the future.
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By: CNN Newsource
September 19, 2026
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