On September 18, 2026, Federal Reserve Vice Chair for Supervision Michelle Bowman announced initial findings from an independent review of Silicon Valley Bank's failure, conducted by Starling Advisory Group. The review highlights vulnerabilities at the bank, shortcomings in the Federal Reserve's supervisory process, and planned reforms. The report itself has not yet been released, and this is the first in a series.
Key Findings
A confluence of vulnerabilities. Unrealized securities losses exceeded SVB's capital, 94% of deposits were uninsured and concentrated in venture-backed technology companies, and the bank lacked operational readiness to borrow from the discount window.
Supervisors knew, or should have known, by March 2022. Roughly a year before the failure, supervisory staff did not take prompt and decisive action to reduce interest rate risk or deposit concentration.
Not caused by regulatory tailoring. The review found the delays were not caused by the 2018 tailoring mandate or by any directive from the former Vice Chair for Supervision.
A culture of risk aversion. Staff believed it was personally safer to take no action unless certain the action was exactly right.
Unclear decision rights. Responsibility, authority, and accountability were separated, leaving staff uncertain about who could authorize action.
Social media did not trigger the run. An analysis by Charles River Associates found no evidence that social media accelerated the run, with 96% of related chatter occurring after SVB's failure had become inevitable.
The Fed's Response
The Fed has issued a Statement of Supervisory Operating Principles directing examiners to focus on material threats to safety and soundness rather than procedural issues. Examination teams will also submit monthly reports highlighting cases where examiners are uncertain whether supervisory action is warranted, creating a more direct path for escalation to senior supervision officials.
CMRA Perspective
Risk escalation has long been a focus of CMRA's Risk Advisory work. Major financial disruptions often arise not because risks were unidentified, but because known concerns were not escalated to decision-makers with the authority to act. The SVB review highlights how this breakdown can occur within both financial institutions and their regulators.
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