In remarks at the Lord Mayor’s Luncheon in London, Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman announced the initial findings of the Starling Advisory Group’s independent review of Silicon Valley Bank’s failure. The first report in a planned series found that Federal Reserve supervisory staff knew or should have known about the bank’s vulnerabilities by March 2022 but failed to take prompt, decisive action. It identified a longstanding culture of risk aversion and unclear decision rights as significant contributors to that inaction. The review attributed the bank’s failure to several combined vulnerabilities, including unrealized securities losses exceeding its capital, a deposit base that was 94% uninsured and concentrated in venture capital backed technology companies, and insufficient readiness to borrow from the discount window. It concluded that supervisory delays did not result from the 2018 regulatory tailoring mandate or direction from the former vice chair for supervision. Separate analysis commissioned for the review also found no evidence that social media triggered or accelerated the run, with 96% of related social media discussion occurring after failure had become inevitable. Bowman also outlined measures addressing the identified shortcomings. Previously issued supervisory operating principles direct examiners to prioritize significant threats to banks and financial stability, take prompt and proportionate action, and use observations alongside matters requiring attention and enforcement actions. Examination teams will also submit monthly reports directly to supervision leaders and their Reserve Banks identifying cases in which examiners are uncertain whether supervisory action is warranted or consistent with leadership expectations.
2026-09-18Federal Reserve Board
Federal Reserve Board Vice Chair Bowman announces initial review findings of supervisory inaction before Silicon Valley Bank failure
Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman announced initial independent review findings that supervisors knew or should have known about Silicon Valley Bank’s vulnerabilities by March 2022 but failed to act decisively. The review linked that inaction to risk aversion and unclear decision rights, while rejecting regulatory tailoring and social media as causes. The Federal Reserve has refocused its supervisory principles and will require monthly escalation reports from examination teams.