In remarks at the Bangkok Economic Festival, Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman outlined plans to modernize supervision by clarifying decision rights, strengthening accountability and accelerating action on material risks. The approach responds to an independent review that found supervisors knew about Silicon Valley Bank’s interest rate and liquidity vulnerabilities at least nine months before its failure but were hindered by unclear authority and a lack of individual responsibility for decisions. The Federal Reserve is considering a more direct allocation of responsibility and authority between Board and Reserve Bank staff, clearer decision rights for examiners and supervisory leaders, and direct escalation channels to senior leadership. Its refined supervisory operating principles prioritize early identification of material risks and timely, proportionate intervention. Bowman noted that SVB received 54 supervisory findings between 2019 and its failure, but none required it to address the core financial risks that threatened its viability. Bowman also called on the Basel Committee on Banking Supervision and the Financial Stability Board to focus on material safety and soundness risks and rigorously validate evidence used to develop international standards. She argued that their earlier SVB work relied on incomplete U.S. reports and should not have supported additional regulatory initiatives, while emphasizing that proportional supervision should direct resources according to an institution’s risk profile rather than weaken oversight.
Federal Reserve Board Vice Chair Bowman sets out supervisory modernization priorities after Silicon Valley Bank review
Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman outlined supervisory reforms centered on clearer decision rights, direct escalation and faster action on material risks following the independent review of Silicon Valley Bank’s failure. She also urged global standard setters to validate their evidence more rigorously, arguing that earlier international work on SVB relied on incomplete U.S. reports.