Fed review pointed to risks at Silicon Valley Bank — CNBC
In London, United Kingdom, Federal Reserve Vice Chair for Supervision Michelle Bowman announced the results of an external review of the Fed’s supervision of Silicon Valley Bank before its collapse in 2023. Consulting firm Starling Advisory Group concluded that Fed staff knew or should have known about the bank’s vulnerabilities before the crisis began, CNBC reports.
Reasons for the bank’s vulnerability
Silicon Valley Bank faced a massive outflow of funds in March 2023 after reporting the sale of securities at a $1.8 billion loss and the need to raise additional capital. The bank’s substantial investments in U.S. Treasury bonds lost value after the Fed began raising interest rates.
According to Bowman, the review also found that 94% of the bank’s deposits were uninsured and that its deposit base was concentrated in technology companies financed by venture capital. After the bank run, the Federal Deposit Insurance Corporation and the Fed intervened, closed the bank, and insured depositors’ funds.
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Assessment of Fed supervision
Michael Barr, then the Fed’s vice chair for supervision, also conducted a review of this episode in 2023. It found that Fed staff had been too cautious in responding to the situation. The new review went further, stating that supervisors knew or should have known about the risks in advance.
Barr left the position of vice chair for supervision in February 2025 so that U.S. President Donald Trump could choose a new top Fed regulator. Trump nominated Bowman for the position, and the U.S. Senate confirmed her nomination. CNBC notes that the findings of the new report may raise additional questions about Barr’s role in the crisis, although Bowman did not mention him by name.
