New report on SVB failure finds fault with Federal Reserve staff

The risk assessors were too risk averse.

In releasing the initial findings of an independent review of the 2023 collapse of Silicon Valley Bank, Vice Chair for Supervision Michelle Bowman found fault with the Federal Reserve’s supervisory staff, writing in the review that “our supervisory staff knew, or should have known” about SVB’s vulnerabilities, while listing six other “critical findings.”

At a speech in London on September 18, Bowman detailed the main takeaways from consulting firm Starling Advisory Group’s independent investigation into SVB’s failure, which Bowman said “fundamentally shook public confidence in the effectiveness of bank supervision.”

The findings from Starling Advisory’s review doubled down on some of the key takeaways of the Fed’s self-assessment released in April 2023—a month after regulators closed the bank.

Bowman, who became vice chair in June 2025, said the new report showed that supervisory staff did not take “prompt and decisive” action, and that there was a “long-standing culture of risk aversion” by employees, according to her prepared remarks. “Staff believed it was personally safer to take no action unless they were certain the action was exactly right,” Bowman said.

Social effect. One area where Starling Advisory’s findings differed from the 2023 report was the latter’s finding that “social media enabled depositors to instantly spread concerns about a bank run, and technology enabled immediate withdrawals of funding.”

While SVB was trying to restructure its balance sheet, the 2023 report stated, it “experienced a bank run as withdrawals of uninsured deposits rapidly accelerated,” in part sparked by “highly correlated withdrawals from [SVB Financial Group]’s concentrated network of VC investors and technology firms who, fueled by social media, withdrew uninsured deposits in a coordinated manner at an unprecedented rate.”

But Starling Advisory found “there was no evidence that social media accelerated the run” on SVB, Bowman said.

“In fact, [consulting firm] Charles River Associates analyzed this claim at Starling’s request and concluded that social media did not trigger the bank run at SVB,” according to Bowman. “Among other things, they found that 96% of the social media chatter regarding the run appeared after SVB’s failure was inevitable.”

Reform. The Fed is not waiting for the review’s final results of the review to begin making changes to its processes. “Going forward, examination teams will submit monthly reports directly to the heads of supervision and their respective Reserve Banks. These reports will identify any supervisory issue or concern in which an examiner was uncertain,” Bowman said.

“This accomplishes two goals. First, it empowers our examiners to escalate concerns without fear, and it gives leadership real-time visibility into where our teams need clearer guidance,” Bowman added.