Fed Review Finds Staff Ignored Silicon Valley Bank Warnings

Federal Reserve Vice Chair for Supervision Michelle Bowman announced the results of an independent review by Starling Advisory Group into the March 2023 collapse of Silicon Valley Bank. Speaking at a luncheon in London, Bowman stated that supervisory staff knew or should have known about the bank's vulnerabilities as early as March 2022 but failed to take prompt action.

The report attributes this inaction to a long-standing culture of risk aversion and unclear decision-making authority, rather than the 2018 regulatory tailoring framework. It concludes the collapse was driven by unrealized accounting losses and a deposit base concentrated in venture capital-backed technology firms, while explicitly finding that social media did not trigger the bank run.

These findings contradict a 2023 internal review led by former Vice Chair Michael Barr, which characterized staff responses as overcautious. While the new report clears former Vice Chair Randal Quarles of responsibility, the discrepancy may lead to increased scrutiny of Barr. President Donald Trump has previously accused the Federal Reserve board of hostility and may seek to remove Barr from his governorship.

Senator Elizabeth Warren criticized the findings as an attempt to justify deregulation. In response to the failures, the Federal Reserve is implementing new operating principles and requiring examination teams to submit monthly reports on unresolved concerns to senior leadership.